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ReportNo: 31924-TP
DEMOCRATIC REPUBLIC OF TIMOR-LESTE
JOINT STAFFADVISORY NOTE
ON THE
POVERTY REDUCTION STRATEGY PAPER
(In Two Volumes) Volume 11
April 29,2005
PovertyReductionandEconomicManagement
EastAsia andPacificRegion
This documenthas a restricteddistributionandmaybeusedby recipients only inthe performance
of their official duties. Its contents may not be otherwisedisclosedwithout World Bank
PART3
STRATEGIESFORNATIONAL
DEVELOPMENT:
SECTORALPLANS
Chapter 9. POLITICALDEVELOPMENT,FOREIGN
RELATIONS,DEFENCEAND SECURITY
Chapter 10. POVERTYREDUCTION,RURAL AND
REGIONALDEVELOPMENT
Chapter 11. SOCIAL AND HUMANDEVELOPMENT:
EDUCATIONAND HEALTH
Chapter 12. AGRICULTURE, FISHERIES AND FORESTRY
Chapter 13. NATURAL RESOURCESAND ENVIRONMENT
Chapter 14. INDUSTRY,TRADE AND THEPRIVATE
SECTOR
Chapter 15. INFRASTRUCTURE
9. POLITICALDEVELOPMENT,FOREIGN
RELATIONS,DEFENCEAND SECURITY
"The development of an effective administrative and governance structure and
capacity to serve the needs and interests of the people and sovereign State of
East Timor i s one of the most critical national priorities for the next five years
and beyond."
9.1 East Timor will be a country with:
a) a solid democratic culture, based on a pluralist, law-based State, where
separation and balance of powers i s real and naturally developed;
b) well structured institutions, open, professional and accountable media,
and an organized civil society active in the defence of global interests;
and
c) a population aware o f and participatory in the process o f social,
political and economic development.
I
9.2 The sector incorporating Political Development, Foreign Relations,
Defence and Security i s presented in this Plan as the collective efforts of a number
o f Ministries and Departments, and encompasses broad areas o f governance,
protection of liberty and safeguarding of human rights.
9.3 Two essential institutions ensuring the healthy functioning o f the nation's
newly won democracy are the National Parliament and the Public Service. The
Parliament must ensure that its legislative functions are accomplished in a timely
manner, as it has an important role in the country's democratisation and
stabilisation. It also has the responsibility in overseeing and controlling o f other
powers, always in terms of its legal mandate. State administration i s to be
undertaken in a professional manner, with effective and efficient performance of
its personnel. The administrative apparatus (Le. number of staff) shall be reduced
to the lowest number possible in order to guarantee its sustainability, and so that
salaries and other forms of compensation can attract the best national staff to
serve the State, without incentives for corruption and/or nepotism.
9.4 East Timor's freedom has been founded upon the willingness o f its
population to participate in the protection o f their liberty and human rights. The
country's defence and security will be understood in the widest context of social,
political and economic development, in the context of poverty reduction and a
participatory and responsible citizenship. They will be
provided by professional military and police forces, which will be non-political and subordinated
to the power of the democratically constituted civil institutions. In its foreign affairs East Timor
will reinforce its position as a country supporting peace and the values of respect, mutual
assistance and cooperation. The administration of justice, accessible to all, will combine
professionalism and juridical expertise with sensitivity to the culture and values of East Timor.
The protection o f rights, freedoms, guarantees and legitimate interests o f citizens will be ensured
by the establishment of an independent institution, also mandated to monitor transparency in
both the public administration and the administration of justice in East Timor. This institution
will guarantee, through accessible and informal means, that citizens will be able to find
expeditious redress to accusations of illegality and/or injustice in the conduct of public
authorities.
9.5 Civil society will take part in the political process through political parties that respect
the rules of democracy and implement them at the parties' organizational level and through other
legal private associations (Le. professional associations, unions, NGOs, etc.) established to
defend the legitimate interests of their members and to take part in the social, political and
economic development o f the country. The media will be responsible and able to inform, educate
and direct national energy towards development and social harmony, guaranteeing the
dissemination of educational information on health, human rights, social harmony and national
development.
9.6 The overarching goals for the sector include:
Fostering a robust multiparty democratic system;
Creating a lean, effective and efficient public service;
Securing the unity, territorial integrity and sovereignty of the nation;
Creating and maintaining durable internal peace, security and stability;
Developing effective professional, non-partisan (non-political) defence and police
forces;
Strengthening regional and international political, economic, cultural and scientific
cooperation and relations;
Developing and administering an effective, accessible, justice system that is in
conformity with positive values and East Timor' s nationalcultural heritage;
Buildingand maintaining an effective and independent oversight system;
Nurturinga responsible, independent and effective media;
Strengthening an already robust civil society and creating opportunities for its
constructive engagement and participationin national life; and
Enhancing the participation of citizens in public and national life.
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9.7 Specific objectives of the National Parliament's are to:
a) Pass relevant, well drafted legislation in a timely manner;
b) Establisha multiparty system and democratic rules through a productive dialogue;
c) Provide a counterbalance to the powers of the Presidency and of the government;
d) Establish and maintain proper, efficient and effective communication between the
various branches of the Government in order to ensure respect for the Constitution
and constitutionally enacted laws, transparency within the public administration, and
the independence and impartiality o f the judiciary.
9.8 The Public Administration will:
a) Create a culture of public service, establishing professionalism in service provision;
b) Establish a well equipped and decentralized administration with simple and
transparent norms in order to move public administration closer to the people;
c) Create internal mechanisms to control and avoid corruption and nepotism.
9.9 The objectives for the Defence Force and Police of East Timor are:
a) Guaranteeing national independence, territorial integrity, constitutional order, and the
safety of people and their property.
b) Preventing crime and involving the community in the reduction of crime.
c) Providing help to the population in case of natural disasters or emergency.
9.10 Foreign Affairs has the following objectives:
a) Maintaining friendship and cooperation links within the region, in particular with the
neighbouringcountries, and with the rest o f the world;
b) Maintaining special links of friendship and cooperation with the Community of
Portuguese Speaking Nations (CPLP);
c) Establishing diplomatic and consular representation overseas in order to develop
foreign policy and ensure protectionof national citizens abroad;
d) Maintaining good relations with other countries, maximizing support for the social
and economic development of East Timor.
9.11 The Courts (in the widest sense of the judicial system, including all three essential
elements ofjudge, prosecutor and defender) shall:
a) Guarantee access to prompt, transparent and equitable justice for all;
b) Administer justice o f technical quality independently, with respect for citizenship
rights, sensitivity to cultural values and popular participationand involvement.
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9.12 The Ombudsman's Office (in support of Human Rights and Justice) aims to:
a) Create and establish a culture of respect for human rights and legality;
b) Prevent and fight against corruption and nepotism in the administration of the State in
order to develop public trust in a fair andjust public administration; and
c) Establish control mechanisms to ensure the accountability o f public servants and
public authorities.
9.13 The objectives of Civil Society, where organized in political parties, are as follows:
a) Make people aware of the political ideals and programs to be undertaken;
b) Monitor public administration activities in order to identify any errors in policies and
programs as well as cases of lack of transparency, nepotism and corruption;
c) Monitor parliamentary activities and propose solutions to national problems in
accordance with the established political rules.
9.14 The objectives of Civil Society, where organized in legal associations, unions and NGOs
are as follows:
a) Defend the legitimate interests of their associates and of the community;
b) Promote the participation of the citizens in public life.
9.15 The activities of the media should have the following central objectives:
a) Report with accuracy, impartiality and professionalism the news and issues of
national interest, including what happens abroad, and in particular in the countries of
the region;
b) Report in a manner that promotes social peace, development and the promotion of
human rights, particularly concerning women, children and the elderly;
c) Follow closely the activities o f the State administration and denounce cases of
corruptionand nepotism.
9.16 The general guiding principles for the sector are:
a) Democracy, sovereignty, respect for human rights, equity and social justice;
b) Rule of law and equality before the law;
c) Transparency and accountability, integrity and public morality;
d) Predictability and consistency;
e) Efficiency;
f) Professionalism;
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g) Sustainability;
h) Decentralization;
i) Participation;
j) Gender and cultural sensitivity; and
k) Socialjustice.
9.17 The organs of sovereignty and public administration will respect the following principles:
a) National sovereignty and State unity;
b) Respect for the Constitutionand for the law, guaranteeing the regular operation of the
democratic institutions;
c) A spirit of public service, professionalism, non-partisanship with respect to political
parties, equity and legality;
d) Moral integrity and professional ethics;
e) Democratic decentralization of administrative structures ensuring accessibility to
services for all citizens;
f) Transparency and accountability of public agents; and
g) Government responsibility for ensuring equality for all when facing the law,
promoting and guaranteeing protection of human rights and caring for victims.
9.18 Inforeign affairs, East Timor is to be guided by principles o f
a) National independence;
b) The right of the people to independence, self determination and respect for human
rights;
c) Mutual respect for the sovereignty, territorial integrity, equality and non-interference
inthe internalaffairs of States;
d) Creation of an intemational economic order capable o f ensuring peace and justice in
the relations between different peopleshations.
9.19 The media will undertake its activities adhering to the following principles:
a) Freedom to inform and be informed;
b) Impartiality and quality;
c) No censorship;
d) Safeguarding the sources of information.
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9.20 The key development indicators for the sector are as follows:
Parliament
a) Level of participation of its members in discussions;
b) Level of the population's awareness of approved legislation.
PublicAdministration
Level of progress in the design of the organic structures of government and of each of
i t s ministries;
Level o f establishment o f departments, with the necessary legal and regulatory
frameworks;
Enactment of the regulation o f the public service, including the formulation of
standardised professional career terms of reference, duties and rights, together with a
code of conduct and a disciplinary process;
Progress in the areas of recruitment and training in order to meet the public sector's
needs for professionalism and for financial sustainability;
Progress in the conducting of studies concerning the reorganisation of sub-national
government, with a decentralization o f services, promoting effective and competent
service provision and an increase of local participation in decision-making,
Security andDefenceForces
a) Level of progress in recruitment and training o f the police forces, armed forces and
information services.
ForeignAffairs
a) Level of progress in recruitment and training o f skilled staff;
b) Progress in the constitution o f the first six diplomatic representations and obtaining
other forms of representation for the country through the good offices of friendly
Embassies.
PublicProsecutionandDefence
a) Progress in recruitment of prosecutors and public defenders and respective supporting
skilled staff.
Ombudsman's Office
a) Progress in the definition o f the legal framework for the Office and in the creation o f
accessible procedures that facilitate the reporting o f injustices and human rights
violations;
b) Progress in the recruitment and training o f skilled staff;
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c) Progress in the level of awareness, by the East Timorese citizens, of their human
rights and their rightto good public administration;
d) Progress in the level of awareness of the existence of services of the Ombudsman as
an effective avenue o f appeal from the actions or omissions of public administration;
e) Level of acceptance of the recommendations o f the Ombudsman by the respective
branches of the public service.
Promotion of Gender Equality
a) Existence o f legislation to protect women from violence;
b) Accomplishment of targets for the participation of women in the public service,
parliament, rural councils, defence and security forces and diplomatic service;
c) Creation of mechanisms to help decrease school dropout rates for girls.
Media
a) Progress in the creation of public media;
b) Approval of press legislation enabling the creation of private means of
communication and regulating professional media activities;
c) Creation of an independent organ that guarantees disciplinary management and
observance o f ethical behaviour by the media and its professional.
Civil Society
a) Progress in the constitution of unions and private associations under the law,
NDCONSTRAINTS
9.21 The principal constraints confronted are as follows:
General constraints:
a) Human resources;
b) Financialresources (budget);
c) Infrastructure (buildings, vehicles, office furniture and supplies, communications and
Information Technology (IT);
d) Problems with multiplicity of languages;
e) Time pressures;
f ) Limitations in institutional capacity;
g) Gaps in the body of laws, regulations, procedures and codes.
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M o r e specific constraints:
a) Absence o f adequate representation on C O M (Le. Armed Forces);
b) Unrealistic expectations (e.g. subsidies for producers and consumers, university
degrees and Public Sector employment for all students);
c) Lack of basic social infrastructure (to accommodate spontaneous relocation of
population);
d) Bad habits from previous period (e.g. corruption, nepotism);
e) Reconciliationproblems;
f) Difficulties with reintegration of ex-FALINTIL and former members of the
clandestine resistance network and with assistance to widows and orphans of
resistance fighters.
GI
9.22 A number of strategies will be adopted to overcome the constraints outlined above:
a) To clearly define and broadcast the rights and obligations of citizens in general and o f
public servants, in particular;
b) To continue the search for more efficient forms of organization of the public
administration to improve quality and cost-effectiveness of service provision;
c) To redistribute available resources, in accordance with new priorities;
d) To recruitto fill vacancies already providedfor inbudget;
e) To train in-house, at the Civil Service Academy, and abroad;
f) To utilize the temporary solution of foreign staff more effectively, during the period
when domestic staff i s being trained;
g) To promote diversification of sources of assistance and develop stronger partnerships
with civil society;
h) To develop appropriate mechanisms to facilitate reintegration of refugees;
i) To redefine priorities for university education, with a view to preparing graduates in
disciplines most useful for the nation's development and improving the quality o f
universityeducation;
j) To promote transparency in public life, accountability in public servants and leaders,
and equal opportunities for all;
k) To reconfigure regional administrative divisions and the intermediate levels of
government (between the national central administration and the community) to make
them more conducive to development and sustainability;
113
1) To transform the present international support and sympathy for East Timor into a
strong and permanent base to secure the country's political, economic (trade and
investment), cultural and national security interests;
m) To develop an independent oversight capacity, capable of encouraging transparency,
and which will allow civil society and citizens to monitor the public service in order
to minimise corruption.
9.23 The following policy initiatives of importance will be undertakenby the sector:
General Policies
a) Creation of incentives to reward effort and excellence in education and in the civil
service (Le. create a meritbased public service).
b) Seek external assistance for buildings and infrastructure.
c) Selection of bursaries to study abroad in countries where the risk of "brain drain" i s
minimized.
d) Development of practical skills training courses (e.g. secretarial, filing, protocol,
mechanics, electricians, hospitality services).
e) Reduction of places in general university courses with limited career prospects.
f> Provision of translation and interpretation services.
g) Accelerated training o f translators and interpreters.
h) Provision of language courses in Portuguese and English.
i) Utilisation of existing facilities and partnerships with non-government entities to
provide practicalcourses in languages, accounting, secretarial, etc. for adults.
j) Selective utilisation of assistance from donor countries and NGOs.
k) Development o f a policy for payment o f university fees and other forms of user
charges.
Public Administration and Democratisation Policies
a) Clear definition and proclamation (broadcasting) of rights and obligations of citizens
and of public servants.
b) Continued search for more efficient ways o f organizing the public administration.
c) Improve quality and cost effectiveness o f service provision (i.e. a lean and efficient
public administration).
d) Decentralization and empowerment o f communities to manage their local affairs
(grass roots democracy).
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e) Gender equality in all aspects of public administration.
f) Reintroduce Portuguese and introduce Tetun as effective working languages of
Parliament and public administration.
g) Enhance the knowledge of members of Parliament.
Security and Defence Forces
Prioritise needs and requirements of the Armed Forces.
Establish technical and military cooperation agreements with defence branches of
CPLP member countries.
Extend support to the veterans of the Resistance.
Establish a Defence Ministry or other liaison office at the COM level.
Elaborate mandate of the Naval Force, including inter-sectoral coordination, and
define its development program.
Develop specialized police forces (criminal investigation, immigratiodfrontier
service, rapid response).
Establish selection criteria for the security forces, including factors of reliability and
social suitability.
Outsource provision of goods and services to the security services and prisons.
ExternalRelations
a) Initiate and gradually expand the nation's diplomatic representation in a systematic
and planned way.
b) Transform previous networks of solidarity and support for Timorese resistance in the
diaspora into a permanent network of allies for the defence of national interests.
c) Pursue and strengthen south-south cooperation.
d) Pursue regional cooperation.
e) Foster special relationship and cooperation with Portuguese speaking countries.
Justice, Human Rights and Gender Equality
a) Create an Ombudsman's office to raise the level o f awareness of citizens' rights and
respect for the law, to defend citizens from any abuse of power by public
administration entities and to safeguard against practices o f corruption, nepotism and
other abuses of power.
b) Draft the legal framework for the nation.
c) Reintroduce Portuguese and introduce Tetun as effective working languages for the
administration ofjustice.
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d) Develop the necessary legal capacity to serve the Government by establishing the
institutions that are essential for the proper functioning of the legal and judicial
system.
e) Promote reconciliation.
f) Facilitate access to justice for women and develop the legal means to fight violence
and other crimes perpetrated against women.
g) Ensure equal opportunities for women in recruitment and promotion and provide
training in technical and leadership skills.
h) Promote a free press.
9.24 The development of an effective administrative and governance structure and capacity to
serve the needs and interests of East Timor and its people i s one o f the most critical national
priorities for the next five years and beyond. After centuries of foreign domination, the country
has been left with out the institutional architecture, the human resources capacity or the requisite
physical infrastructure and equipment, not only to effectively discharge the challenges of
national development, but also to meet the demands of routine governance. After two years of
comprehensive effort, political institutions are only nascent; central and regional administrative
structures and institutions fledgling; and the operational systems, procedures, and relationships
are yet to be developed or clearly defined.
9.25 Given the existing environment, the priority medium term programs will have to be the
establishment and strengthening of the organs o f state and of public administration, laying the
foundations o f good governance, creating the avenues for popular and community participation,
developing the legal and regulatory framework, buildingthe human resources capacity for policy
formulation and execution as well as service delivery, strengthening oversight institutions and
fostering the press and civil society. After the previous administration there i s also a glaring need
to develop a new culture of public service, good governance in public administration and a
strong work ethic. The formulation of the above programs is, however, only the initial or
preliminary stage. Although there are some mature programs ready for implementation, most
will require extensive effort and time for their design and implementation.
PublicAdministration and Governance
9.26 The core programs in this sector will focus on developing transparent governance,
institutional and human resources development, decentralization, and development of a lean
efficient and merit based civil service.
Transparentgovernance
a) Development of information programs for the general population and for civil
servants regarding the activities of Parliament, the functions of each Ministry, the
services that citizens have,a right to expect from public institutions and the courses of
redress available in case of non-compliance.
b) Introduction o f an action program to enhance the skills o f Members of Parliament, via
technical assistance, specialized courses of study and experience-sharing visits
abroad.
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c) Development of a medium and long-term program for the reintroduction of
Portuguese and introduction of Tetun as effective working languages of Parliament
and government.
Institutional Development
a) Design and introduce effective administrative regulations, systems, and procedures
for all public service institutions.
b) Develop civil service regulations governing recruitment, working conditions, career
paths and a code o f conduct.
c) Develop a training program for the civil service to enhance capacity.
Decentralisation and Participation
a) Study and introduce an optimal sub-national configuration conducive for
development as well as service provision in conjunction with stakeholders.
b) Study and delineate the levels of administrative hierarchy down to the community
that will facilitate cost effective and efficient service delivery and enhance
community initiative and participation.
c) Study options for effective decentralization that clearly defines the roles of central,
regional, local and community, and civil society organizations and entities; empowers
communities and strengthens transparency and grass roots democracy.
Media Development
9.27 Create public enterprises in radio and TV broadcasting, in accordance with the
Constitution, and train media professionals.
Security and Defence Forces
9.28 In the area of defence and security the formation and consolidation of a model
professional army to defend the sovereignty and territorial integrity of the nation and, similarly, a
police force to maintain internal law and order are the major programs.
Defence program
a) Development of a model professional army through the continuation o f the process of
recruitment, training and equipping.
b) Supporting the process through cooperation agreements with other countries.
c) Establishment of a Defence Ministryor other liaison office at the level o f the COM.
d) Program to identify the veterans o f the Resistance, study their needs, and formulate
training and other forms o f assistance.
Police and Security Service Programs
a) Strengthening of the police service by training an additional 520 new recruits at the
Police College and by improving the material support to those already deployed.
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b) Establishing new specialized units (criminal investigation, border patrols, rapid
response).
c) Formulating outsourcing modalities and incentives for provisioning the prisons and
security services that facilitate participation by local firms.
External Relations
9.29 Diplomacy and external solidarity was one of the most effective pillars of the Resistance.
At this new chapter in East Timor's history, the medium term diplomatic programs and external
work will be directed at building on this experience, and our extensive solidarity network, to
maintain the strong international support and empathy to address our long term national needs
and interests. Programs will, therefore, focus on developing the necessary institutional and
human resource capacity to chart and implement the policies and programs that will enable us to
marshal their extensive external assets and to deal with the ever-evolving global and regional
developments.
CapacityBuilding Program
9.30 The main components of this program are as follows.
a) Recruitment and training, in country and abroad, to staff Headquarters and Missions.
b) Construction of a Headquarters building.
c) Development and implementation of a plan to utilize previous networks of support to
Timorese resistance and diaspora organizations, transforming them into a permanent
network of allies abroad in defence of Timorese interests.
d) Elaboration and implementation of a plan to gradually and systematically expand
diplomatic representation abroad. Utilisation of various options and modalities to
achieve wider representation.
Policy Development Program
a) Articulate global and regional policies to safeguard and serve the national interest on
the bases of the guiding principles and in light o f external developments and trends.
Action Program
a) Develop, in collaboration with other relevant ministries and institutions, action
programs relating to the attraction o f foreign investment, promotion of exports and
foreign trade, and external aid to guide the activities of the ministry. Develop similar
action programs regarding political, cultural and defence and security relations.
b) Develop a program to reinforce south-south cooperation.
Justice, Human Rights and Gender Equality
9.31 The justice system, both in its legal framework and its administration, is of critical
importance to society at large and the development process in particular. In this unique situation,
where the legal framework i s defined by its practical non-existence and where the capacity for
the formulation and administration o f the body of laws i s in its embryonic stage, the issue of
prioritization and sequencing becomes of extreme importance. It thus becomes necessary to, on
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the one hand, seek a longer time frame to develop the body of laws and the capacity, and, on the
other, to put interim arrangements or solutions in place. The elaboration of the following
programs o f the Ministry of Justice will require extensive time and effort.
Institutional Development Program
a) Creation of an Ombudsman's office to raise the level of awareness of citizens' rights
and respect for the law, to defend citizens from any abuse o f power by public
administration entities, and to safeguard against practices of corruption, nepotism and
other abuses of power.
b) Creation of a Judicial Training Centre and a Public Defender's office, as independent
agencies.
c) Establishment and implementation of a timetable for setting up functioning registrar
and notary services, including modalities to ensure that such services are made
available to the population in the interior of the country.
Legislative Program
a) Formulation of a legislative agenda for the Government indicating the sequence of the
desired legislation and the internal and external resources, as well as time required to
draft such legislation. This agenda will include, among other laws, National Defence
Law, Company Law, Land Law, Investment Law, and Media Law.
b) Development of the capacity to prepare proposals for legislation, draft legislation and
to prepare legal opinions and advices, as requiredby effective government.
Reconciliation Program
a) Promotion of reconciliation activities, with the support of the Reception, Truth, and
ReconciliationCommission, the Church and civil society.
Rights and Equality Program
Capacity building for women's participation in leadership and decision making
through training in order to stimulate skills for decision making, negotiation, politics
and other leadership areas.
Ensuring gender balance through recruitment, elimination of constraints and
discrimination against women and integration of gender issues in all laws, programs
and policies.
Promotion of family-friendly policies that promote appropriate measures to facilitate
the family and professional lives o f women and support their participation in public
life.
Promote legal protection from violence against women through adoption of
legislation, access to the judicial system and creation of institutional mechanisms in
order that women and girls are able to denounce acts o f violence. Promote
cooperation between authorities and social support programs and involvement of
women inprotection services.
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e) Encourage social change regarding violence against women through analysis of
causes and consequences, and the development and promotion of education
campaigns.
f) Develop protection services through the creation of refuge centres and support
systems for victims of violence and by creating programs for protection, assistance
and training for refugee or displaced women to facilitate their reintegration into their
communities.
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10. POVERTYREDUCTION,RURALAND
REGIONALDEVELOPMENT
10.1 That the people of East Timor live in a prosperous society, comfortable in
terms o f food, shelter and clothing, in safety, and free from illness and ignorance
(illiteracy); with an income that i s fair and equally distributed; with no
discrimination; and with a balanced development of towns and villages and
different areas.
10.2 The Poverty Reduction and Rural and Regional Development Working
Group was co-chaired by the Minister for Internal Administration and the
Secretary o f State for Labour and Solidarity. Representatives of all the
departmentslsections in the Ministry of Internal Administration and the Secretary
of State for Labour and Solidarity took part in the Working Group. Also, officials
from a number o f other Ministries including Agriculture, Education, Health and
Finance participated in the Working Group. The output o f the Working Group i s
presented in the following paragraphs.
Poverty Reduction
10.3 Poverty i s multidimensional and i s experienced in different ways by
different people. The usual measure of poverty i s the headcount ratio, which i s the
proportion of people living below the national poverty line. Adapting the
methodology used in other countries, the poverty line for East Timor i s estimated
to be US$0.55 per person per day in September 2001. It incorporates a food
component (2,100 kilocalories) and a non-food component covering, among
others, expenditures on education, health, clothing and housing. The data show
that more than two-in-five (41 %) East Timorese are below the poverty line.
10.4 Other dimensions o f poverty include education, health, water supply,
sanitation, infrastructure including roads and electricity, communications, security
and empowerment. On education, for example, the adult illiteracy rate in East
Timor i s high with more than half the East Timorese population unable to read
and write. Health indicators show a high mortality for infants and children below
five years o f age. Death o f mothers in childbirth (maternal mortality) i s also high.
Further dimensions relate to security and empowerment. Security includes
security of person, property, food and livelihood (including jobs and
vulnerability). Empowerment involves a lack o f "voice" and a limited
participation of the poor in decision-making on their future and the affairs of their
communities on economic, social, cultural and political issues, or a lack of
involvement in institutions o f society and state. It also involves a lack of freedom
to exercise and enjoy basic human rights, essential economic and social rights - to
be productive and creative, enjoying self-respect, and contributing to the we11
being of the community and the nation.
10.5 The incidence of poverty i s higher among households headed by those with no schooling
(around one-in-two or 49 %), fishers (47 %) and farmers (46 %). Poor households in East Timor
are more likely to be large with a low proportion of earners (or a large proportion of children and
old people leading to a higher dependency ratio), and have very little land. A large majority (85
%) of the 341,000 poor people live inthe rural areas of country.
RuralDevelopment
10.6 More than three-quarters (76 %) of East Timor's population lives in the rural areas.
Poverty incidence in the rural areas (46 %) i s significantly higher than that in the urban centres
(26 %), with Dili and Baucau having the lowest (14 %). The bulk of the country's poor are
located in rural areas. Landholdings are small for the majority of the population, with about 24%
of households owning less than 0.5 ha each, and a further 60 % between 0.5 and 1.5 ha each. The
productivity o f land i s relatively limited, due to low-input, low-output technologies that
emphasise risk minimisation, since crop failure may jeopardise survival of the family. Access to
markets i s difficult. Buyers may be scarce, and unwilling to pay prices that include profits due to
highcosts for transport, storage, and processing.
10.7 Access to basic social services in rural areas is significantly lower than that in urban
centres. For example, access to both primary and secondary schools in rural areas i s far less
favourable than in urban centres. A number of the rural sucos do not have a health post and some
are not even served by mobile clinics.' Most of the qualified medical personnel are concentrated
inurban centres, and accessto qualified doctors and nurses is virtually non-existent inmost rural
areas. Access to safe water, sanitation and electricity, while limited overall, i s very low in the
rural areas. Access to roads and communications i s also a major constraint facing rural residents.
As a result, many of the income, education and health indicators show a considerable gap
between rural and the urban areas.
Regional Development
10.8 The nation is divided into three regions, Eastem, Central and Westem,' and 13 districts.
Prior to 1999, a Governor headed the East Timor Province, with each of the three regions
administered by an Assistant Governor. Bupati administered districts, with Sub-districts led by
Camats. After 1999, the Government provided for District Administrators and sub-district
Coordinators. However, the roles and responsibilities of these functionaries, as well as the Suco
and Aldeia chiefs, are still evolving. The necessary legislation and regulations are expected to be
inplace inthe next two to three years.
10.9 There are significant disparities between the regions and districts in economic and social
indicators. For example, poverty incidence i s high in the rural areas o f the Central and Western
regions as compared to the rural Eastern region. Access to public facilities (e.g. schools and
health centres) i s more difficult in the upland areaddistricts, as i s access to roads and markets.
Although the topography i s difficult, the agro-climatic conditions in some areas (e.g. in the
' Mobile clinics and health posts are the frontline health delivery facilities that reach down to the villages, while community
health centres (CHCs) are often located at sub-district (posto) headquarters and in the small number of hospitals in the urban
centres of Diliand Baucau.A few CHCs are equipped with a limited number of beds.
The Eastem region comprises Baucau, Lautem, Manatuto and Viqueque districts; the Central region comprises Aileu, Ainaro,
Liquica and Manufahi as well as Dili districts; and the Westem region covers Ambeno (Oecussi), Bobonaro, and Covalima
districts. A redefinition of the regions is expectedafter independence.
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Central region) may be favourable for higher value crops (e.g. coffee, fruits and vegetables) and
have good proximity to markets.
10.10 The Ambeno (Oecussi), Bobonaro and Suai districts face unique problems. Ambeno is
surrounded b y Indonesia, and access to the rest of East Timor i s either by sea or through
Indonesian territory. Given the current state of infrastructure, the costs of linking Ambeno with
the rest o f East Timor may be prohibitive in the short and medium term. It will require specific
economic, trade and social (including language) policies for the district. Similarly, the border
districts o f Bobonaro and Suai face distinct opportunities and constraints in their relations with
the other districts in East Timor and across the border inWest Timor.
10.11 Poverty reduction is a crosscutting issue, addressed in the overall development strategy
and in each o f the sector strategies, programs and projects. As a result, responsibility for poverty
reduction i s distributed among a wide range of institutions. Similarly, rural and regional
development i s addressed mainly through macro and sector programs, and several Ministries and
Departments are involved in these efforts. For example, the local government functions are under
the purview o f the Ministry of Internal Administration, while the Secretary of State for Labour
and Solidarity i s expected to facilitate the delivery of assistance to vulnerable groups, depending
on resource availability.
10.12 The overall goals of poverty reduction, rural and regional development, as formulated by
East Timorese are as follows.
Transform the subsistence economy and achieve a rapid economic growth that i s
stable and sustainable, utilising to the full the country's resources; create equitable
business opportunities and increase rural incomes.
Deliver training and health services, create equal opportunities to obtain work, and
establish a social safety net to help victims of disasters.
Create skilled and professional human resources in accordance with the interests and
talents of the people in each sector, and ensure an effective utilisation of labour.
Create a society, which i s free from internal and external threats, and make the
country attractive and safe to citizens and visitors.
Reduce poverty in all its aspects, particularly among women and vulnerable groups.
Promote integrated rural development to reduce poverty, accelerate economic growth,
and reduce the gap between rural and urban areas.
Achieve balanced regional development to reduce poverty, improve the lives of East
Timorese in all regions, enhance and exploit complementarities between regions and
agro-ecological areas, accelerate economic growth, and reduce regional disparities.
Access, maintain, and make available cultural, popular (folkloric) and historic
artefacts and government recorddmaterials, for present and future generations of East
Timorese.
Promote good governance through: popular participation; responsible and responsive
government; a competent, efficient, accountable and transparent civil service;
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decentralisation and devolution; a socially responsible private sector; and transparent
and accountable civil society organizations.
10.13 Promoting rural and regional development within a framework for poverty reduction and
economic growth in East Timor will be based on the concept o f sustainability, and on the
following principles.
Participatory Development
0 Empowerment of rural people, enabling them to participate, contribute ideas, and
make and implement decisions regarding their needs in terms of the policies and
programs they have chosen.
0 Ensuring the involvement of individuals and communities in all village
development activities in rural areas.
Integrated and Equitable Development
0 Development to be undertaken in an integrated manner between the various
sectors, so that it spreads evenly from the centre to the districts and to lower
levels.
Equality and Non-Discrimination
0 Development to respect equality and human rights without racial, religious,
gender or ethnic discrimination, in accordance with the Constitution of East
Timor.
Social Solidarity
0 Development to be based on principles o f social solidarity among the people,
including assistance to vulnerable groups.
0 Development to take place within a framework that can create democratic and
social conditions conducive to raising the living standard of the poor, and of
vulnerable groups.
Professionalism
0 Poverty reduction to be based on principles of professionalism, such as
dedication, honesty, commitment, transparency, creativity, innovation,
effectiveness and efficiency.
EnvironmentalProtection
0 Development to be based on a respect for, and a desire to protect the
environment, and the use of natural resources in a sustainable way.
Preservation of Culture
0 Development to uplift, rather than erode, the nation's cultural heritage and values.
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h) National unity, peace and hard work
0 Development to promote national unity, peace and reconciliation and the
instilling of a strong work ethic
10.14 The key development indicators identified by the Working Group on Poverty Reduction
and Rural and Regional Development overlap to a large extent with those presented in Chapter 2
on Vision, Goals, Principles and Indicators (Annex l), a detailed breakdown by gender,
with
rural and urban areas, regions and districts, and income groups (poor and non-poor) wherever
appropriate and feasible. They cover the standard indicators including GDP per capita, ratio of
income of the richest 20 % to the poorest 20 %, Gini coefficient of inequality in income
distribution, labour force and employment, poverty incidence, access to and use of education and
health services and safe water and sanitation, housing, electricity and communications. They also
include security and empowerment.
10.15 The problems and constraints for poverty reduction and rural and regional development
are grouped under the broad headings of resource constraints, labour, social and gender areas,
capacity, infrastructure, rural-urban and regional disparities, civil service, private sector, legal
framework and governance.
Resource Constraints
Shortage o f animals.
No means to lift and/or pump water for irrigation.
Inadequate agro-processing facilities.
Lack of capital.
Lack of, or limitedmarkets.
Lack of economic opportunities.
Limited economic support services.
Lack of growth centres.
Lack o f opportunities for remunerative work.
Shortage of labour during critical periods.
Discrimination in access to work opportunities.
Lack of information on employment and unemployment, and on labour issues such as
workplace safety.
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Social Aspects
a) Lack of social accountability.
b) Informal institutions weakened during the occupation and violence, with no formal
social institutions set up duringthe transition period.
c) Lack of awareness o f rights and responsibilities (civic education).
d) Lack of willingness to take initiatives and break the cycle of dependence.
e) Political and social divisions.
f) Political disturbances.
g) Social turmoil.
h) Lack of, or weak social cohesion and solidarity.
Gender aspects
a) Discrimination against girls and women.
b) Highunemployment rate, especially among women.
c) Low wages especially for women.
d) Lack of professional skills among women, especially young women.
e) Lack of training facilities for women.
Capacity
Lack of teachers and trainers.
Limited capacity within Government, private sector and civil society organisations
including NGOs.
Limited capabilities or skills among people in general, and poor people in particular
(e.g. literacy) in the villages.
Lack of knowledge of industry,
Lack of skills to start and operate businesses.
Illiteracy, including inability to manage money.
Inadequate number of personnel.
Limitedcapacity of existing personnel.
Traditional low-input, low-output technologies.
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Infrastructure
a) Lack of appropriate and essential facilities, equipment and supplies, including
medicines.
b) Inadequate number of public facilities, such as schools and health centres.
c) Inadequate, and limited access to infrastructure.
d) Poor maintenance of existing infrastructure.
e) Access to other parts of the country difficult and/or costly.
Rural-urban and regionaldisparities
Limited access to relatively lower quality social services (including education, health,
water supply, sanitation, and housing in rural areas, as compared with urban centres.
Regional disparities in educational achievement and opportunities (e.g. Baucau has
the largest number of schools in the country whilst some of the other districts have
very few schools).
Civil service with very limited presence in regional areas.
Lack of articulation o f values and principles on the "service" role of civil service.
Limited capacity within civil service.
Limited number of civil servants.
Privatesector
Lack of policies and programs to develop entrepreneurship and support for private
enterprise development.
Lack of competition in the private sector.
Legal framework
Lack o f legislation and regulations in areas such as immigration and labour.
Lack o f national support and advocacy on behalf of susceptible groups in legal
difficulties. Outmoded laws.
Inadequate capacity (number of personnel, skills, institutions, facilities and
equipment) in thejudiciary, legal professions and the police force.
High cost (financially and intime) ofjustice.
Lack of well-defined property rights, especially for land.
Governance
a) Lack of coordination and cooperation between government and non-government
institutions.
127
Vested interests aiming to grab much of the public resources.
Uncertainty regarding security and the nature of government andor governance
among the population.
Crime.
Lack of institutionalmechanisms for coordination in different districts and/or regions.
Lack of targeted support to meet the needs of children and the disabled.
Lack of plans for district development, based on comparative advantages.
Lack of criteria for allocation of resources to districts.
Lack of capacity at district level to account for funds allocated.
Lack of transparency.
Inadequate accountability mechanisms.
Long colonial past with highly centralised decision-making in gc `ernment.
Lack of understanding of the Portuguese language among many administrators.
Legacy of bribery and corruption
Political favouritism in civil service recruitment.
Political influence in allocation of funds.
Corruption.
ES S
10.16 The proposed strategies are outlined below, together with suggested programs, projects,
policies and legislation for the achievement of each strategy necessary for the attainment o f the
stated goals. Several proposed programs overlap with those proposed by other Working Groups,
particularly in areas such as agriculture. The annual action plans of Ministries must take account
of the activities of other Ministries and agencies o f Government.
10.17 The overall strategy for poverty reduction i s presented in Chapter 4. As poverty reduction
i s an overarching goal, it i s mainstreamed into the sector chapters. A sample of these are
enumerated in the following.
CREATING ECONOMICOPPORTUNITIES
10.18 The strategies for creating economic opportunities are included mostly in the sector
chapters, especially on Agriculture, Fisheries and Forestry and Industry, Trade and the Private
Sector. The specific strategies formulated by the Poverty Reduction and Rural and Regional
Development Working Group include the following:
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a) Transformation of the non-farm subsistence economy through small-scale, home and
cottage industries and other business activities that generate income for the poor.
b) Provision of skills training and guidance to increase the ability of the poor in
managing small businesses so that they become self-reliant.
c) Increased production in the rural areas through the application of appropriate farming
techniques and promotion of agro-industries.
d) Identification and development of potential markets for products inside and outside
the country
10.19 The policies that are conducive to promoting the above include those on micro finance,
and policy or guidelines on small-scale, cottage and village industries. For example, the latter
may include exemption from licensing, taxes and other restrictions; while enforcing the
observation o f hygiene, health and environmental regulations. The types of programs and
projects visualised are listed in the following:
a) small-scale industries promotion program
b) household and cottage industries promotion program
c) hawkers and vendors (petty trade) program
d) micro credit or micro finance programs and projects
e) training programs for small-scale, home and cottage industries
f ) project to strengthen technical and vocational education.
g) bee keeping and honey production (apiculture) project
h) production of tais, bags and baskets project
i) production of small tools including agricultural implements project
j) production of packaged food such as peanuts and shrimp/fishcrackers project
10.20 The performance indicators are:
a) number o f new small and micro enterprises established and operating by gender of
owner/operator
b) increase in non-farm income of poor and low-income households
c) number of borrowers under micro credit schemes by gender
d) average amount of loan per borrower in micro credit schemes total and by gender
e) number of training programs conducted
f ) number o f trainees by gender
g) number o f trainees graduating from technical and vocational education training
programs and number employed by gender
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10.21 In addition, the Working Group proposed other training for farmers and fishers in such
areas as improved crop husbandry, irrigation management, livestock raising and veterinary care
and fishing and aquaculture. The policies, programs and projects overlap with those in other
sectors. In operational terms, most of the activities are covered in other sectors including
Industry,Trade and the Private Sector and Agriculture, Fisheries and Forestry.
PROVIDINGSOCIALSERVICES
10.22 The strategies, programs and projects on provision of education and health services
proposed by the Poverty Reduction and Rural and Regional Development mirror those presented
in Chapter 10 on Social and Human Development: Education and Health, while those on water
supply and sanitation and housing are covered in the relevant sections of Chapter 15 on
Infra~tructure.~The specific additions proposed include programs to increase the skills of the
people in general and the poor in particular; and to create networks between the Government and
non-government institutions that are active in the delivery of education and training services to
society.
ENHANCING SECURITYINCLUDINGDISASTERPREPAREDNESSAND SAFETY NETS
Security
10.23 The country has been emerging from the 1999 violence and turmoil. There i s still
lingering insecurity, mistrust and friction from the occupation and resistance movement. Also,
political social divisions and some uncertainty about the scope of government security after
independence prevail. The Plan proposes the creation and strengthening of family and
community consciousness to increase the sense of solidarity, and create safe and peaceful
conditions. The specific interventions under the strategy include programs and projects for:
intelligence gathering and pre-emptive actions to prevent and combat crime.
involving communities in monitoring potential risks.
investigating and solving crimes as soon as possible.
strengthening community solidarity through the creation of a system of protecting
people, which i s participatory and responsible.
supporting people to be active in guarding the security and public order in residential
areas in all areas (rural and urban) of the country.
strengthening the capacity of the community to withstand and overcome disturbances
and challenges (e.g. through provision of financial resources, equipment and training
to communities/areas prone to such disturbances).
establishing an early warning system with the involvement o f the people to identify
potential security and social disturbances and evolve measures to prevent them.
organising campaigns on civic education and social solidarity
'Forexample, the Poverty Reduction and Rural and RegionalDevelopment Working Group identified health programs such as rehabilitation and
expansion of health facilities, health personnel training, supply of health equipment and essential medicines, immunization, and amelioration of
vitamin and micronutrient deficiencies among children and pregnant and lactating women. However, these programs are an integral part of the
Plan interventions proposed under the Health Sector in Chapter 11.
130
i) mobilising traditional institutions and leaders to promote social cohesion
j) instilling family values through schools and other means.
10.24 Many of these activities fall under the purview of the Ministry of Internal Administration,
especially the Department of Local Administration and Police and Security Forces. The
performance indicators include: (i) reduction in number of crimes reported, (ii) of crimes
number
solved and average time taken to solve the crimes, (iii)number of neighbourhood watch
committees established, (iv) number of communities trained and supported including average
amount of support provided, (v) number of early warning groups established, (vi) number of
people reached by civic education campaigns by gender, (vii) number of leaders contacted and
trained in promoting social cohesion, (viii) number of courses conducted in schools on family
values and civic education and number of students covered, and (ix) number of people and
communities organised to participate in community safety and peacekeeping by the police.
Disaster preparedness
10.25 It is recognised that in the medium term the resources and capacity at the Government's
disposal are extremely limited to provide direct assistance to vulnerable groups. Therefore, much
of the focus in the Plan i s on preventative measures and strengthening the self-reliance of society
to care and share and cope with disasters and other contingencies. The programs and projects
include the following:
setting up early warning systems to gather and disseminate information on floods,
droughts, landslides, etc. These could be simple systems at the village, posto and
district levels under a national centre.
compiling information on how communities have coped with disasters in the past
(e.g. through the National Archives) and examine whether similar practices could be
adopted.
creating a network to strengthen the preparedness of society in facing and coping with
disasters.
organizing communities prone to disasters to help themselves through setting up
community food banks, stocks o f other materials, etc.
encouraging religious organizations and other voluntary groups including NGOs to
set up mechanisms to monitor and assist.
establishing a national disaster prevention and preparedness group (including
representatives from local and international organizations) to plan and coordinate the
activities.
making provision in the government budget for assistance to victims of disasters,
providing support to victims o f disasters including emergency aid and support for
rehabilitationheconstruction of houses.
recruitingand training SATGAS who will deal with disasters.
10.26 The disaster preparedness functions mentioned above are the responsibility of the
Ministry of Internal Administration. The performance indicators include: (i) early warning
system established, (ii) number o f food banks and other community storage established to cope
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with disasters, (iii)
number of religious groups and NGOs mobilised to participate, (iv) national
disaster prevention and preparedness group established, (v) amount of money allocated in
Govemment budget for disaster preparedness, (vi) number of disaster victims helped and average
amount per victim, and (viii) number of SATGAS recruited and trained.
Vulnerable groups
10.27 The strategies comprise the (i) provision of assistance to vulnerable groups such as
women in difficult circumstances (e.g. widows and victims of violence), the elderly (old people),
veterans of the resistance movement, refugees, destitute (very poor) families and prisoners to
recover and lead satisfying lives as full members of society, (ii)establishment of a special
facility for the service of children and the disabled, (iii)organisation of coordination,
consultation and joint work between NGOs and the church in the framework of providing
services to vulnerable groups, and (iv) formation of a working group to advocate on behalf'of
vulnerable groups who are facing legal problems.
10.28 The proposed programs and projects include the following:
a campaign to stop violence against women and children.
counselling and assisting female victims of violence who are socially and
economically vulnerable.
supporting the elderly with essentials such as food and clothing and organizing
recreation groups.
providing assistance to veterans in the form o f training, credit and other support
services.
supporting refugees and displaced people by returning them to their original places of
residence, providing food, clothing, shelter in the transition, facilitating
reconciliation, and providing the means to re-establish their lives and livelihoods.
social service programs for children.
helping the disabled (physically challenged).
assisting the school system to provide school supplies and equipment for neglected
children.
scholarshipbursary programs for orphans and children from poor families that
demonstrate good academic potential.
training programs in computers and sewing for the disabled.
providing economic support to the disabled.
improving the situation of destitute people through provision of food and other basic
necessities and housing materials.
supporting prisoners and former prisoners including training and skills development,
counselling and resocialization.
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n) establishing a mechanism (working group) to provide legal advice and support to the
vulnerable groups in need of such advice.
0) setting up a consultation and coordination mechanism and organize joint programs
between government, church, NGOs and other groups on provision of services to
vulnerable groups.
10.29 Many of the activities proposed above are expected to be undertaken by the Social
Affairs Department in the Secretary of State for Labour and Solidarity, while the rest will be
implemented by other MinistriesDepartments (e.g. Education and Justice). However, the
Government budget situation i s not adequate to provide any significant resources to fund the
activities in the next two to three years. Accordingly, it i s proposed to include the activities inthe
annual action plans as budget resources become available.
Empoweringthe people
10.30 The country had experienced for almost a quarter century, the lack of awareness and
interest on the part of civil servants in involving people in the development of the country. It also
created an attitude among the people not to take initiative and to depend on the government. It i s
important to break this cycle of dependence. The development strategies include: (i)
strengthening and sustaining the political will in the government to support policies and
endeavors for poverty reduction, (ii) liberating society from all social and cultural impediments
that constrain development, (iii) strengthen formal and non-formal local social institutions, and
(iv) promoting popular participation, especially of the poor and other vulnerable groups in
economic, social and political processes.
10.31 The programs and projects proposed to translate the above strategies into action include
the following:
organise advocacy groups (e.g. NGOs) to promote and sustain government
commitment to poverty reduction.
organise citizens groups to watch and monitor how public resources are being
allocated and spent, with particular attention to poverty reduction.
inform people o f the successes and failures of government interventions, especially
on poverty reduction programs.
promote the strengthening of informal social institutions such as community mutual-
help groups, farmers groups, irrigation/water user groups, fishers groups and
women's groups, through facilitation and organization.
establish and strengthen formal social institutions such as cooperatives, savings and
loan associations and marketing groups (e.g. coffee marketing), and religious and
interest groups (e.g. labour unions).
introduce programs to facilitate the formation of the poor into groups, provide
training and help undertake economic, social and advocacy activities to advance the
welfare of the groups.
formulate and implement legislation to allow the formation, registration and
functioning o f various groups within the law and without violating the rights of other
groups or citizens.
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h) discourage social and cultural practices such as spending beyond one's means, or
bride price, through civic education with the involvement of community leaders and
prominent persons. Consider introduction of legal measures to curb harmful practices.
i) undertake community animation and confidence building programs using
participatory approaches such as that adopted in the Participatory Potential
Assessment.
10.32 The responsibility for implementation of the above activities will be spread across
various MinistriedDepartments. Some of the programs and projects are already included in the
Sector Plans, while others would needto be incorporated inthe annual plans.
Gender dimensions
10.33 The strategies include:
a) the creation of equal opportunities to obtain work including the conditions that have a
positive effect on the working conditions and income of women workers in the formal
and non-formal sectors, through a:
program to create an enabling environment for employment o f women in
remunerative jobs (including incentives to employers).
program o f child care (day care) centres for working women with children.
policy favouring employment of women.
policy and guidelines on workplace facilities for women (e.g. child care centres,
separate washrooms and recreation areas).
law against discrimination against women in employment and wages.
law against harassment of women in the workplace.
b) provision of training to women in general and young women in particular in a number
of skilldfields (e.g. management, enterprise development and information
technology) at the national, regional and local levels to facilitate their participation in
economic activities, including
professional training programs for women in such areas as management,
enterprise development and information technology at the national and regional
levels.
establishing and strengthening professional training facilities for women at
different levels.
training programs for women at the suco and aldeia levels suited to the local
circumstances (e.g. availability of raw materials and supplies and support services
such as electricity and credit) and markets for the products and services they
produce.
134
c) establishment and strengthening of a network of businesswomen through policies to
support private enterprise, women's organizations, cooperatives and groups, to enable
women to help themselves and other groups. These include a:
0 project to establish network(s) of businesswomen.
0 project to establish and/or strengthen women's groups.
0 program to establish and/or strengthen women's cooperatives.
0 project to support East Timorese women's groups to establish contacts and
networks with similar groups in other countries in the Asia-Pacific region, and in
other parts of the world.
10.34 The above activities will be mainstreamed into the programs and projects of relevant
Ministries. The performance indicators, which may be monitored by the relevant Ministries as
well as the Office of Promotion and Equality, include the following:
increase in number of women employed in formal private sector.
institution o f policy favouring employment of women.
new workplace facilities for women (e.g. child care centres, separate washrooms and
recreation areas).
enactment o f law against discrimination against women in employment and wages.
enactment o f law against harassment o f women in the workplace.
number of professional training programs for women and number of women trained
ineach discipline.
number of training programs for women at the suco and aldeia levels and number of
women trained.
number o f networks of businesswomen established and number of members.
number of women's groups established andor strengthened and number o f members.
number of women's cooperatives established strengthened and number of members
covered.
LO
10.35 Goal: Promote integrated rural development to reduce poverty, accelerate economic
growth and reduce the gap between the rural and urban areas.
10.36 The strategies include the following:
a) Empower the rural people through education and organizational skills training,
b) Strengthen the economic base o f the communities and enhance productivity.
135
c) Improve access to infrastructure and markets.
d) Improve the protection and sustainable use of natural resources (e.g. land, water,
forests, fisheries and minerals, but excluding oil and gas) and the environment in the
communities.
e) Reduce the gap between urban centres and rural areas in economic opportunities,
provision of social services and infrastructure (including communications).
f) Promote development of urban areas and other growth centres.
10.37 The policies, programs and projects proposed for rural development are:
Integrated community education, training, information and communications program.
Program to strengthen the autonomy and self-reliance of village communities.
Policy on local government/governance at the suco and aldeia levels.
Integrated community economic development program.
Integrated community services development program covering such areas as health,
education, water supply, sanitation, agricultural extension and veterinary services.
Integrated community infrastructure development program.
Programs for community management of infrastructure maintenance.
Programs for community protection and the use of public resources, such as forests
and fisheries.
PolicyAegislation on community management and the use (sharing of benefits) o f
public resources, such as forestry and fisheries.
Law prohibiting the delineation and privatisation of community and common
property resources.
Laws regulating the management and use o f natural resources and protection of the
environment.
Programs to encourage dispersal of investments to areas close to urban centres, and to
areas appropriate for resource endowments and products (e.g. coffee processing).
Programs to improve the quality and quantity of social services in rural areas, with a
particular focus on the poor, women and other vulnerable groups.
Programs to improve the rural infrastructure (including farm to market roads, and
rural electrification) and communications.
Dilidevelopment program.
Urban centres development programs.
Programs to develop markets and growth centres in highlands.
Programs to develop markets and growth centres in lowlands.
s) Policy on urban development and city/municipal governance (government).
t) Policy on rural-urban migration.
u) Policies on markets and growth centres.
10.38 The above policies, laws, programs and projects are either implicitly or explicitly
incorporated in the relevant sectors including Agriculture and Infrastructure. The importance of
integration of the various development interventions to ensure complementarities (avoid
duplication) and enhance the impacts i s emphasised. Relevant performance indicators for the
activities have been formulated and presented in the sector chapters.
10.39 Goal: Achieve balanced regional development to reduce poverty, improve the lives of
East Timorese in all regions, enhance and exploit complementarities between regions and agro-
ecological areas, accelerate economic growth, and reduce regionaldisparities.
10.40 The strategies formulated by the Working Group to achieve the above goal include the
following:
a) reduce imbalances in education, organisational skills and institutional mechanisms for
development between the regions/districts.
b) strengthen the economic base of the districts, taking into account their resource
endowments (land, agro-climatic conditions, people and their skills, etc.), enhance
productivity, and enhance complementarities between districtdregions.
c) improve access to infrastructure and markets in regionddistricts that are relatively
disadvantaged.
d) allocate central (national) government resources to district(s) based on population,
land area, present level o f development and other specific problems which the district
faces to ensure equitable sharing and promotebalanced development o f all districts.
e) develop districts and areas with specific problems - Le., Ambeno (Oecussi),
Bobonaro and Covalima districts, and Atauro and Jaco Islands.
10.41. The policies, programs and project proposed are:
a) programs to strengthen and expand education and skills training opportunities in
relatively disadvantaged regions and districts.
b) program to strengthen the organisational skills of government, private sector and civil
society organisations in regions/districts that are relatively disadvantaged.
c) program to create and/or strengthen institutional mechanisms for coordination of
development activities in regions and districts that are relatively disadvantaged.
d) formulation and implementation of district and/or regional economic development
programs, with particular attention to agro-ecological and human resource areas.
e) program to adapt appropriate technologies for improving productivity.
137
tailor-made training and extension programs to enhance the skills of people (e.g.
farmers and small entrepreneurs in agro-industries, marble/mineral extraction).
programs of economic support services including rural electrification, input supply,
marketing, etc.
integrated infrastructure development program in relatively disadvantaged districts.
strengthen the capacity of district administrations in finance and management.
devise policies to raise additional resources from both internal and external sources.
devise criteria for allocation of resources among districts, taking into account their
current state of development.
law on local government, specifying the roles and responsibilities of district and
lower level government administrations.
program to develop Ambeno district, including land and sea transport linking it with
the rest of the country.
program to develop Bobonaro district.
program to develop Covalima district.
program to develop Atauro Island.
program to protect and develop Jaco Island for eco-tourism and bio-diversity
research.
policy on border trade and the flow o f people between Ambeno district and West
Timor.
policy on border trade and the flow o f people between Bobonaro and Covalima
districts and West Timor.
policy on development of Atauro Island.
policy on conservation, protection and use of bio-diversity in Jaco Island.
10.42 Many of the activities proposed above require clarifications on the coverage/boundaries
of the regions and the roles and responsibilities of local government entities and personnel at the
district, sub-district and lower levels. The Ministry of Internal Administration will be an
important actor in helping to clarify these and formulating the local government code or law.
Also, the Ministry would have to coordinate many o f the activities. The promotion of regional
development may be spearheaded by different line Ministries such as Agriculture depending on
the resource baseand comparative advantage of the districtdregions.
10.43 Goal: Strengthen the capacity of civil service at the national and local levels and enhance
its efficiency, transparency and accountability.
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10.44 The civil service i s staffed mostly with people with minimal experience in government
and governance. It i s much smaller than that prior to 1999. Strengtheningthe capacity of the civil
service i s a priority. The policies, laws, programs and projects include the following:
program to strengthen the capacity of civil service including in
administratiodmanagement,finance and budgeting
training of trainers program
training programs with adequate representation of different groups such as women
and language groups)
curriculum and training materials development projects
external training program(s)
monitoring and follow-up of trainees project
supply of equipment and facilities programs
civil service recruitment policy (e.g. to ensure adequate representation of women,
social and language groups and regions/districts transparent, fair and merit-based
manner)
civil service reward, promotion and career development policy
civil service separation and disciplinary action policies
civil service code of conduct, rules and regulations
civil service law
orientation and training programs to instil the values and principles of serving the
people within the civil service
program to evaluate civil service performance
program for the formulation and promulgation of civil service rules and regulations
promoting transparency and accountability '
program to establish and operate accountability systems and mechanisms within the
civil service
program to establish and operate citizen watchdog mechanisms
policy on public access to, and disclosure o f government information
policy on role and accountability o f civil service
policy on citizedcommunity mechanisms to monitor the civil service
10.45 The policies, laws, programs and projects will be implemented by the relevant entities
under the Ministry o f Internal Administration in cooperation with other Ministries and
Departments. Also, citizen participation in monitoring the performance o f civil servants in
service delivery and in seeking accountability i s important.
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Immigration Service
10.46 Create an Immigration Service, which i s professional and efficient, providing a quality
service for citizens and visitors.
a) program for recruitment of additional staff
b) training programs, including (English) language training
c) program to provide office facilities (including buildings), and equipment
d) program of technical advice and services
e) program to monitor visitors and immigrants
f) program to establish a database on visitors and immigrants
g) policy on immigration, including visa and other entry requirements
h) policy on immigrants' rights to work, start businesses, and engage in other activities
NationalArchives
10.47 The objective is to access, preserve and make available cultural, popular (folkloric) and
historic artefacts and govemment records/materials for present and future generations o f East
Timorese. The National Archive will acquire, preserve and make available to the public oral,
written, film, tape, photographic and other materials through the its facilities.
10.48 Many of the artefacts have been lost or destroyed during the 1975-1999occupation and
during the 1999 paramilitary violence. There are no records or knowledge of East Timorese
materials taken to other countries including Portugal, other Portuguese-speaking countries and
Indonesia. Further, the information on what i s available in East Timor i s limited. The programs
and projects include the following:
cultural and historical materials collection program
cultural and historical materials and heritage buildingdarchitecture preservation
program
cultural and historical display and dissemination programs
research programs (library and field projects, including archaeological projects)
training programs
buildings/facilities and equipment supply projects
program for accession and preservation of government records
policy on culture and heritage
policy on the retrieval and repatriation o f East Timorese cultural, historic and heritage
materials from other countries
policy on accession and preservation of govemment records
10.49 The National Archive under the Ministry of Internal Administration will implement the
activities, subject to availability of adequate resources.
Labour
10.50 The objectives include the improvement in the utilization of labour with equitable reward
(wage) system and workplace safety; establishing and maintaining a labour market database,
introduction o f manpower planning, and dissemination of the information to all interested
parties. The strategies include improving the functioning o f the labour market through
employment exchanges, business (employer) consultation forums, and the media, establishing
and maintaining a labour market database, introducing manpower planning, and disseminating
the information to all interested parties;
program for promotion of formation of labour groupshnions to protect workers'
rights
program for promotion of occupational safety and environmental health
project for promotion of job security
program for promotion of retirement pension schemes
program for promotion o f disability insurance
program for promotion of mediatiodarbitration in labour disputes.
minimumwage policy
working hours policy
policies on leave and other workers' rights
labour law that incorporates internationally accepted (ILO) labour standards and
practices.
program to establish labour market database
manpower planningprogram
program to strengthen staff capacities
program to set up labour market monitoring and information collection offices in
districts
program of dissemination of labour market information and manpower plan
policy requiring employers to provide information on employment, wages, working
hours, etc., by occupation (skill level)
program to establish and operate employment exchanges to match jobseekers with
potential employers
program to establish business (employer) consultation forums
policy on advertisement of vacancies inthe media
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t) regulationon supply of information onjob vacancies to employment exchanges
10.51 The above activities will be implemented by the Secretary of State for Labour and
Solidarity in cooperation with other Ministries. The activities will be prioritised and
implemented in phases to respond to emerging needs and demands, subject to availability of
resources.
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11. SOCIALAND HUMANDEVELOPMENT:
EDUCATIONAND HEALTH
"Meeting East Timor's basic needs in health and education is vital for the
nation's development, in reducing poverty, promoting economic growth, and
inimprovingthe livelihoods of itspopulation."
11.1 Our vision is that by 2020, the East Timorese people will be well
educated, healthy, highly productive, democratic, self-reliant, espousing the
values of nationalism, non-discrimination and equity within a global context.
11.2 Meeting East Timor's basic needs in health and education i s vital for the
nation's development, in reducing poverty, promoting economic growth, and in
improving the livelihoods of its population. Education and Health are the largest
sectors, in terms of expenditure, both in 2001-2 and for the foreseeable future.
This expenditure reflects the wishes of the population, as expressed in the recent
Countrywide Consultation, in which 70% of the population prioritised education
as one of the three most important sectors to be developed for the country's
future, followed by health, prioritised by 49%. The PPA completed in January,
2002, produced similar results. These views are captured in the vision presented
inthis document. Inmeeting its people's needs inhealth and education, however,
both government and civil society organisations face formidable challenges.
Education
11.3 East Timor has an illiteracy rate of 50-60%. 46% of the current population
have never attended school. Almost two-thirds of the female population is
illiterate. The primary enrolment rate i s low, as are school retention rates.
Approximately 20% of children enrolled in primary schools rarely attend classes.
There i s a substantial shortage o f trained teachers, and teaching quality i s low. In
the 2000-01 school year, for example, of the 2,091 secondary school teachers,
only 106 had formal secondary school training. The curriculum introduced during
the Indonesian occupation i s viewed by East Timorese students and teachers as
outmoded and irrelevant.
11.4 During the UNTAET period, some increases have occurred in primary
school enrolment, particularly for girls, but there have been declines in secondary
school attendance. Tertiary provision and skills training remain grossly
inadequate. The current teacher-student ration in the primary sector i s 1:62.
11.5 During the period before oil revenues begin to have an impact, key
challenges to be addressed are:
a) A rapid expansion in primary school enrolment, particularly for
children from poor households.
A reductioninthe highdrop-out rate at primary level.
An improvement inteaching quality through the provision of appropriate training.
The design and introduction of literacy manuals, and the implementation of
campaigns to address the low literacy level within the population.
A specification of the respective roles to be playedby the government, church, NGOs
and local communities inthe management of education.
The development of strategies for the furtherance of the Portuguese language at all
education levels, and amongst the adult population.
11.6 The heavy burden of disease in East Timor is due largely to the prevalence of
communicable diseases such as malaria, tuberculosis, respiratory tract and childhood infections.
The current TB rate is 900 per 100,000. Life expectancy ranges from 50-58, and i s combined
with high infant mortality rates of 78-149 per 1,000 live births, and under 5 mortality rates of
124-201 per 1,000 live births. Women bear an unacceptable burden of maternal mortality and
morbidity, with maternal mortality rates at 350-800 per 100,000 live births. Only 30% of births
have any skilled birth attendance. Approximately 3-4% o f children aged 6 months to 5 years are
acutely malnourished, whilst one in five i s chronically malnourished. 45% of children under 5
are underweight.
11.7 Duringthe Indonesian occupation, the health system delivered poor quality services, and
was widely mistrusted by the population. Duringthe paramilitary rampage, most health facilities
were destroyed, and there was a total collapse o f the health system.
11.8 During the UNTAET period, access to basic services has been restored, a TB program
has been implemented, immunisation services have been developed for women and children, and
basic health packages have been designed. Health centres have been rehabilitated and re-
equipped. A plan has been devised for human resource development, capacity-building, and
health training.
11.9 The main challenges to be addressed by the health sector are to design and implement
policies, programs and projects addressing:
highrates of maternal and infant mortality
a highproportion of illness and death due to preventable communicable diseases
the prevalence o f malnutrition, iodine and vitamin A deficiency
the lack of access to safe drinking water and sanitary facilities for a majority of the
population
poor reproductive health
the prevalence throughout the country of post-conflict mental health problems and
trauma
poor and inequitable access to health services
n) inadequate management support systems
0) an inadequate referral system
p) poor knowledge of HIV/AIDS among the population.
11.10 In both the health and education sectors, a major challenge is to set clearly-defined,
specific priorities in line with available expenditure. A medium term framework has been
developed, selecting priority areas that can ensure most successfully the delivery of services to a
population with continuing highlevels of poverty.
Gender
11.11 Women play a vital role in East Timorese society. They manage community resources,
households, and constitute a crucial part of the labour force, particularly in agriculture. Yet they
are not adequately represented in positions of power throughout the country. Gender inequalities
are addressed in many of the objectives, strategies and policies in the national plan. There are
particular gender concerns in human development - notably in relation to women's levels of
literacy, training, and health needs. These issues are covered in the particular projects and
programs outlined for the health and education sectors.
11.12 The goals for the education and health sectors are to:
a) improve the education and health status of the people of East Timor;
b) contribute to the improvement of the economic, social and cultural well being of
individuals, families and communities in East Timor; and
c) promote gender equality and empower women in East Timor.
GUI P
11.13 Several principles serve to guide development in education and health, with the following
of particular importance.
Human Rights: Human development programs will respect all internationally
recognized human rights and fundamental freedoms consistent with the East Timor
Constitution, including the right to development.
Cultural, Religious and Gender Sensitivity: Human development in East Timor
will respect its people's cultural and religious diversity and enhance equality among
men and women, by promoting the values of tolerance, dialogue and peaceful
resolution o f differences.
Quality and Relevance: The implementation of human development programs in
East Timor shall promote high standards and ensure that the choices are oriented to
the country's needs.
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Sustainability: To achieve long-lasting human development, human and natural
resources shall be managed taking into account financial capacity, appropriate and
existing technology.
Equity and Accessibility: The provision of education, health and other basic needs
shall be fair, affordable and within everyone's reach.
Social Solidarity: Human development programs will promote the values of
community participation, self-help and shared responsibility between government and
all actors in civil society.
Ethics and Efficiency inPublic Service: Public service will be guided by the values
of courtesy, efficiency, productivity, honesty and high ethical standards in order to
achieve full transparency, accountability and public satisfaction.
Legality: Given the special circumstances o f East Timor as a new nation, human
development will take place within a responsive legal framework and with respect for
the rule of law.
Creativity and Innovation: Human development will aim to harness people's
natural creativity and reward innovation.
Protection of the Environment: Human development programs will take into
account the impact on the environment and promote environmental protection for
future generations.
ELOPM
11.14 The key development indicators for the sectors and for particular components of each
area are as follows.
Education
Literacy rate
Net enrolment ratio in primary and secondary schools
Primary education completion rate
School attendance
School participationby age
School participation rates of richest and poorest quintiles of the population
Household expenditure on education at primary and secondary levels
Levels of educational attainment
Life expectancy at birth
Infant mortality rate
c) Under 5 mortality rate
d) Maternal mortality rate
Labour
a) Labour force participation rate
b) Unemployment rate
Economic, Social and Culture
GDPper capita
% of households below the poverty line
Income distribution index
% of displaced families with access to education and health services
% of orphans and widows with access to education and health services
% of disabled with accessto education and health services
% of families with accessto radio/television/telephone
Number of cultural and civic society associations
Voter participation rate
Number of street children
Number of orphanages
Crime rate
Suicide rate
Number of librariesmumber o f people visiting libraries
Number of people in receipt of social security
Rate of youth participationin socialkultural organizations
Gender Equality
a) Ratio o f boydgirls at all education levels
b) Ratio o f literate females, urbadrural
c) Percentage of women employed on completion o f studies
d) Incidence of domestic violence
e) Female access to health services
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f) Proportion of females holding decision-making positions, in both public and private
sectors.
PROBLEMS CONSTRAINTSCOMMONToBOTHSECTORS
AND
11.15 Both the education and health sectors face a number of difficulties, some of which are
common to both sectors, and some of which apply to each sector separately. The common
problems and constraints are as follows:
Literacy
a) Highlevels of illiteracy, particularly amongst women
b) Female education plays an important role in health since women make many of the
decisions about the health of the family. Better-educated people know more about
healthy behaviour and make better choices about childbearing, food distribution and
nutrition, personal hygiene and seeking health care. The literacy rate among the adult
population is generally low with women lagging behind (54% for men and 40% for
women).
Culture
a) Lack of awareness of education and health problems, particularly for women. There
i s also a general lack of understanding of education and health benefits.
b) Cultural inhibitions - many people do not seek appropriate health care until it i s very
late (due to a preference for traditional practitioners).
c) Girls experience discrimination in access to education due to traditional practices,
such as early pregnancy and marriage, demanding household work and the failure of
educational materials to address gender issues.
Poverty
a) Income levels are related to people's standard o f living, access to food, education and
health care - the essential elements o f health. About 41% of the East Timorese
population lives below the poverty line. Poor people are more likely to become ill,
remain ill,and discontinue their education,
Poor nutrition
There i s a high prevalence of malnutrition, iodine and vitamin A deficiency. Malnutrition i s
prevalent among infants and pre-school children, as well as pregnant and lactating
women. Available information indicates that 3-4% of children aged six months to five
years are acutely malnourished, while one in five i s chronically malnourished. Vitamin
A deficiency, iodine deficiency disorder and anaemia are significant problems in children
and mothers.
Unequal distribution of food and health care in the family favours boys. This i s similarly the
case in the areas of education opportunity and health care.
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Lack of adequate food, directly affecting health, and indirectly, the ability to learn.
Limited knowledge of nutritional practices.
Infrastructure
a) Inadequate infrastructure, lack of available transport, and poor physical facilities
result in geographical and social isolation of villages and households.
Quality of services
a) General lack of availability of inputs and materials
b) L o w public confidence in both the health and education systems
Resource constraints
a) Inadequate financial resources
b) Inadequate human resources in number and skills
Legal Framework
a) Lack of comprehensive legal framework
b) Inadequate management and support systems
Gender related issues
a) Low level of awareness of gender issues at all levels and sectors
SECTOR SPECIFIC PROBLEMS CONSTRAINTS
AND
11.16 A number of problems and constraints are experienced in both the education and health
sectors separately, including the following.
Education
a) Community
0 Lack o f involvement in school management
0 Householdand farming needs limiting school attendance -particularly for girls.
0 Highnumber of illiteratepeople
b) Pre-School
0 Insufficient number o f pre-schools (currently, there are 43 pre-schools)
0 Lack o f budgetary support from the Government
0 Lack of support from both the community and NGOs
c) All School Levels (Primary School to University)
149
0 Most six year old children do not enter the 1'' grade of primary school
0 Students do not complete the six grades in six years
0 Lack of support for special school provision
d) Insufficient Number o f Schools
e) L o w Quality
0 Lack of specializedteachers
0 Lack of appropriate study material
0 Lack of qualified labour force
0 Lack of adequate study material
0 Very limited access by students to libraries
f) L o w Effectiveness and Efficiency of Educational Management
0 Lack of strategic planning for documenting and replicating existing good practice
(as, for example, in existing pre-school provision and women's literacy circles
organised outside the formal sector by NGOs)
0 Lack of sports activities in schools and within society in general
0 Government has not yet defined its policy regarding Youth and Sports
0 N o sports managers or relevant technical and human resource capacity
0 Insufficient and inadequate sports equipment
h) Curriculum
0 The current curriculum i s too abstract and arduous
0 The curriculum context does not reflect the values and reality of East Timor
i) Youth
0 The qualifications held by unemployed youth are not relevant to the current
labour market
0 There are insufficient youth activities
j) Culture
0 Lack of experience in articulating cultural values, and in assessing how these
values can be expressed most effectively and appropriately
150
0 Very few readily accessible museums, libraries and organized historical
documentation centres
k) Language Provision
0 Difficulties in standardising Tetun and reintroducing Portuguese as a languageof
instruction in a relatively short period of time
Health
a) Major Public Health Problems
0 Highmaternal and infant mortality.
o East Timor has one of the highest rates of maternal mortality in the region
with estimates ranging to over 800 deaths per 100,000 live births. This i s
unacceptably high. The infant mortality rate i s estimated by the Ministry of
Health to be 70 - 95 per 1,000 live births, the most common causes being
infections, prematurity and birthtrauma.
0 A highproportion of illness and death due to preventable communicable diseases
such as malaria, tuberculosis, childhood respiratory infections, measles, typhoid,
and diarrhoeal diseases.
0 A highprevalence of malnutrition, iodine deficiency and vitamin A deficiency.
o As noted above, this is a problem for both education and health sectors.
Specifically, for the health sector, malnourished people are more likely to get
sick and to die from their illnesses.
0 Low access to safe water and sanitation.
o Unhygienic conditions increase people's chances of getting sick and making
their illnesses worse. A majority of the population do not have access to safe
water and sanitary facilities. They depend on contaminated or unprotected
sources of water. Existing systems for solid and liquid waste disposal are
inadequate.
0 Poor reproductive health i s a major cause o f maternal mortality.
o A complex interplay of social, economic, environmentaland cultural factors,
and limited availability of health care services contribute to poor
reproductive health within the population. There i s an increasing incidence
o f teenage pregnancies with short periods of time between each pregnancy.
0 High prevalence of communicable diseases and a rising incidence of non-
communicable diseases.
0 Poor knowledge of HIV/AIDS among the population.
o HIV/AIDS i s a global problem that has potential to have devastating effects
on the people of East Timor as they become exposed to the rest of the world.
Current knowledge and awareness about HIV/AIDS i s low.
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0 Lack of education on oral health.
0 Prevalence of post-conflict mental health problems and trauma.
o Currently, mental health services are inadequate. Major mental problems
observed in post-conflict East Timor include psychosis, acute schizophrenia,
suicidal depression and severe trauma-related reactions.
0 An increase inenvironmental degradation, occupational and environmental health
problems in recent years.
b) Problems Related to the Performance of the Health System
0 Poor and inequitable access to health services.
o Much of the population living in the rural areas, does not have easy access to
the health system - due both to geographical inaccessibility and to
inadequate provision of infrastructure and transport facilities. Average
walking time to the nearest health facility i s 70 minutes.
0 Inadequate management support systems.
o The absence of a regulatory framework - health regulations do not deal with
public health issues, such as environmental and occupational hazards.
0 Inadequate referral system.
o This results in delayed treatment and inappropriate utilisation of health
services.
11.17 The following objectives address the various problems identifiedinhealth and education.
Education
a) Increase the population's awareness and understanding o f basic educational needs,
and particularly:
0 Reduce the number o f illiterate people within the adult population, with an
emphasis particularly on women;
0 Encourage community and NGO participation, particularly in relation to the
implementation of pre-school education;
0 Strengthen the community ownership of education through inclusion of parent,
community, student and teacher groups, involving them in the development of
appropriate quality educational provision in local areas.
b) Increase access to education and develop means for ensuring the retention of children
within the school system, at all levels; improve the drop-out rate.
c) Rationalize educational provision in relation to the varying needs of different areas.
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Improve educational provision, particularly through the provision of professional
training, notably for girls and women, adults, and groups with special needs.
Increase the efficiency of school organization and management.
Encourage sports education in schools.
Develop a curriculum appropriate to East Timor's contemporary needs, encouraging
the development of cultural identity, and stressing the importance of the values of
democracy, self-sufficiency, national unity and non-discrimination. Develop
programs for unemployed youth, and for school drop-outs, providing qualifications
enabling them to re-enter the labour market.
Develop extra-curricular occupational programs.
Develop forms of culture and art, emphasizing the national identity o f East Timor.
Re-introduce and develop Portuguese and Tetun as the official languages of East
Timor.
Health
a> Reduce levels of maternal and infant mortality.
b) Reduce the incidence of illness and death due to preventable communicable and non-
communicable diseases, including HIV/AIDS.
Improve the nutritional status of mothers and children.
Improve reproductive health in East Timor.
Ensure that all people have access to health services.
Ensure the delivery of a minimumhealth care package at all levels of service.
Collaborate with all stakeholders in the health sector to achieve national goals for
health.
Ensure that sufficient and adequate health professional training i s undertaken to meet
national requirements.
Regulate the employment of all health professionals to ensure minimum standards o f
professional practice.
Provide sufficient referral and tertiary health care services, including laboratory
support services, to ensure that referral cases are treated effectively.
Improve the organization and management systems inthe health sector.
Increase women's access both to health information, and to quality health services.
Increase the availability o f mental and dental health services.
Contribute to the improvement of occupational and environmental health in East
Timor.
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11.18 Based on these objectives the following basic policies will be formulated.
Education
Promote mandatory education for all children of school age.
Develop primary education for all as the main goal and priority in allocation of
government resources.
Create incentive partnerships with the private sector, NGOs, parents' associations and
the community, to support education at all levels, in pre-school, secondary school,
vocational training and non formal education, as well as in university education.
Establish a minimum qualification for teachers, such as a university degree. Develop
additional relevant specialisations for secondary school, vocational training, as well
as for university teachers and assistants;
Mainstream gender concerns in all educational programs and monitor the impact of
these programs on women's education, through the development and use of gender-
sensitive indicators.
Work with relevant sectors/organisations to advocate an improved status for women,
promoting equal rights for men and women in access to education.
Have as a key policy objective to increase women's access to information on
educational provision.
Emphasise preventive and promotive health care, provided closest to the community,
with the additional aim o f limiting expenditure on hospital care.
Adopt primary health care policies enabling increased accessibility and coverage of
health care.
Adopt a policy of integrating the health care system with other sectors.
Target groups to achieve the greatest health impact (e.g. emphasizing mother and
child health care).
Develop health staffing policies appropriate to the needs of the country.
Promote access and utilization of basic health services by vulnerable groups.
Adopt IntegratedManagement o f Childhood Illness (IMCI).
Mainstream gender health concerns in all programs and monitor their impact on
women's health, through gender-sensitive indicators.
Work with relevant sectors/organisations to advocate an improved status for women,
promoting equal rights for men and women in access to health.
j) Have as a key objective to increase women's access to health information and quality
health services.
11.19 These policies will be realised through the following strategies.
OVERALL STRATEGIES
Education
11.20 Inthe short term - over a 2-3 year period- strategies will aim to consolidate the efforts
and achievements of reconstruction. This will be done through rationalising educational
provision in relation to the needs of different areas of the country, and by developing human
resources within the educational sector as a whole. Institutional capacity will be strengthened
within the ministry,to promote reforms and to plan and develop educational programs.
11.21 In the longer term - over a 5-10 year period - strategies will aim to promote reforms in
key areas o f the sector, as well as developing measures for institutional strengthening to achieve
the provision o f universal primary school education. Curricula will be designed and
implemented, promoting high quality teaching relevant to the needs of East Timor. Institutional
capacity will be strengthened, with the aim of an efficient management of the overall educational
system.
Health
11.22 To meet our goal, strategies will emphasise the importance of primary health care,
focusing on prevention and the targeting of underserved areas. Primary health care is a system
of essential health care, based on practical, scientifically sound and socially acceptable methods
and technology made universally accessible to individuals and families in the community
through their full participation and at a cost that the community and country can afford to
maintain at each stage o f its development, in a spirit o f self-reliance and self-determination. It
forms an integral part both of the country's health system, of which it i s the central function and
main focus, and o f the overall social and economic development o f the community. It i s the first
contact point with the national health system for individuals, the family and community, bringing
health care as close as possible to where people live and work. It forms the first step in a
continuing health care process.
Gender
11.23 Women in East Timor have been suffering from both a national culture o f violence, and
from the results of mass displacement. Both o f these increase the feminization of poverty.
There are no laws either ensuring the protection o f women's fundamental rights or addressing
the social and cultural obstacles favouring men's access to opportunities. The goal of promoting
gender equality and empowering women must entail changes in attitudes, government social
institutions and private sector practices. Our overall strategy i s focused on mainstreaming
gender and gender equality in all areas, and at all levels of education and health, assessing the
implications for women and men of any planned action in order to ensure that institutions,
policies and programs respond to the needs and interests o f women as well as men and distribute
benefits equitably between women and men.
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The root cause of gender inequality in human development lies in the social structures,
institutions, values and beliefs which create and perpetuate women's subordination. Solutions
should not aim merely to integrate women in the development process but must also reshape the
human development agenda, reflecting gender concerns. Consequently, gender objectives in
education and health must emphasize the need for gender awareness campaigns at all levels, in
order to deal with the stereotypes that are obstacles to a full participation of girls in the
educational process, particularly after secondary school, as well as for the need for formal and
vocational training as an instrument of empowerment. In relation to health status, the objectives
of our strategy centre on information and educational campaigns on women's right to health,
involving all key stakeholders, to ensure that women, due to their specific vulnerability -
particularly in reproductive health - are not exposed to continued health hazards and risks.
SPECIFIC STRATEGIES
Education
11.25 The strategies that are specific to education are the following.
Educational campaigns, focusing on three areas:
0 Promotion of the importance of basic education (defined not simply in relation to
reading, writing and numeracy, but encompassing a broad range of thinking,
conceptualizing, analyzing, participating and learning skills);
0 Literacy programs: addressing the range of relevant skills required to enable poor
and vulnerable groups to develop basic learning skills and knowledge of issues
relevant to their daily lives and to their plans for the future.
0 Nation-wide campaigns on pre-schooling and primary education, raising the
importance of girls' access to education.
Improving enrolment and attendance
0 Educating teachers, community leaders and parents on the importance o f their
responsibilities in securing enrolment and attendance in school of children of
school age.
0 Improving health at schools by providing school snacks as a way of reducing
absenteeism and drop out rates.
Rationalising educational provision, by building new schools, increasing school size,
and closing redundant schools.
Improvingteaching capacity, through:
0 The training of teachers, in Portuguese/Tetun language.
0 Increasing the availability of textbooks and other teaching materials; school
facilities must be adequate and sufficient for all levels, including special schools.
0 Establishing performance management programs and nationalexaminations.
Setting up career plans for teachers and school deans.
0 Developing programs for institutional strengthening.
0 Setting up scholarship programs for school managers and administrators.
0 Developing training programs in basic education planning and management for
the different levels of school managers at central, districts and schools offices.
Providing equipment for sporting facilities and organizing sport competitions.
Developing relevant curriculum and education programs.
0 Developing an appropriate curriculum at all levels, which promotes practical
activities, interaction between teachers and students, relevancy of content to
contemporary East Timorese reality, and takes into account questions of human
rightsand gender.
0 Developing contemporary programs for education, introducing new learning
techniques.
0 Developing and/or improving the quality of text books, other materials, and
learning processes, stressing the importance of eliminating stereotypes associated
with gender, and adopting a relevant curriculum.
Developing appropriate vocational training and distance learningprograms.
Developing East Timorese concepts of literacy and basic education through
conferences, training programs, and professional development.
Developing extra-curricular activities, social and cultural events for East Timorese
youth.
Designing workshops, conferences, and seminars promoting East Timorese cultural
values.
Developing Tetun and reintroducing Portuguese as the official languages of
instruction.
Assisting policy development through inputs into government by international
experts, and via conferences, materials, and other documented international
experience.
Health
a) Targeting mother and child health by:
0 Increasing immunization coverage of all children under five
0 Growth monitoring
0 Adopting Integrated Management of Childhood Illness (IMCI) and providing
training at Community Health Center level
0 Providing antenatal services close to the community
157
0 Upgrading midwifery skills
0 Training Traditional Birth Attendants (TBAs)
b) Emphasising health promotion through health education focusing on major health
problems and targeting community schools, youth groups, and risk groups through
health promotion campaigns, training, curriculum integration, media, environmental
health education
c) Prevention and control of communicable diseases through:
0 Disease surveillance
0 Capacity building, includingtraining
0 Developing a system of timely detection and control of epidemicddisease
outbreaks
d) Improving nutritional status of mothers and children through:
0 Micronutrient supplementation
0 Promotion of exclusive breast feeding
0 Growth monitoring
0 Health education on good nutrition
e) Improving management of humanresources by:
0 Developing a comprehensive human resources development plan
0 Training an adequate number o f health personnel based on nationalneeds
0 Establishing regulatory mechanisms for medical practice and professional ethics
0 Developing incentive systems for motivating health personnel
0 Optimizing the use o f available human resources through appropriate skill mix
and productivity improvement
f ) HIV/AIDS preventionthrough:
0 Providing Information, Education and Communication (IEC) targeting vulnerable
groups and individuals
0 Establishing voluntary counseling and testing
0 Encouraging community participation and working with social, religious and
women's organizations
0 Developing the capacity o f health workers and community groups
0 Developing the legal and policy framework
158
0 Developing support services
0 Advocacy work with key stakeholders, such as churches and women's
organisations
Promotingreproductive health through:
0 The creation of awareness on STI and other reproductive health problems
0 Sex education in schools, media and health facilities, and youth centres
0 Promoting the benefits of family planning
0 Early detection, diagnosis and treatment of breast cancer, cervical cancer,
STI/HIV
Improving access to, and utilization of health services particularly by vulnerable
groups through:
The construction of new facilities
Rehabilitationof existing facilities
Provision of additional services in facilities to ensure all priority interventions are
available
Involvement of NGO health providers in the overall plan to increase coverage of
primary health care
Fostering active participation of the community
Reducing the cost o f seeking health care by the poor, children under 5, pregnant
women, the elderly and the disabled.
Health promotion and education to influence health-seeking behaviour,
alleviating social-cultural barriers
Developing and implementing a rational secondary and tertiary hospital development
plan
Improving management systems of health services by:
0 Strengthening the planning and policy development capacity of the Ministry of
Health
0 Improving financial resource allocationto increase efficiency
Adopting a multi-sector approach in dealing with health problems, in order to ensure
contributions by other sectors concerned with health status improvement
Improving access to information and provision of health services through:
0 Expanding coverage of women's health care services
159
0 Working with other partners to promote women's health and education
0 Monitoring the impact of health programs on women's health
m) Developing national mental and oral health programs that address prevention,
promotion and appropriate treatment at district level
n) Improving occupational and environmental health through:
0 Collaboration with the Departments of Labor, Environment and Infrastructure to
develop regulations, strategies and plans to combat occupational and
environmental health hazards
0 Environmental and occupational health education programs, designed by the
Ministry of Health
Education
11.26 Based on the objectives, policies and strategies, and addressing the problems and
constraints outlined above, the following programs and projects will be implemented by the
Ministry of Education over the five-year NDPperiod.
Program 1:Expand Access and Improve Internal Efficiency
11.27 While one of the major accomplishments of the Transitional Administration has been the
tremendous increase in enrolment at all educational levels, it i s estimated that almost 25% o f all
children of school age are still out of school. Moreover, there i s a significant misalignment of
age by grade due to the late start for most first graders, and a high drop-out and repetition rate
which renders the system very inefficient. The key program thrust for the next five years i s
therefore to expand access particularly in basic education, and to improve the internal efficiency
of schools. Some of the projects to be implemented are as follows.
a) Information Campaign on the Importance o f Schooling
b) School Drop-out Prevention
c) School Location Planning
d) Multi-grade Schools
e) School Health and Nutrition
f) Community-Based Pre-School Development
Program 2: Improve the Quality of Education
11.28 One of the main issues in East Timor i s the poor quality of education, largely brought
about by the low qualifications o f teachers and headmasters. A key program thrust in the next
five years i s therefore an improvement in quality, particularly in primary and secondary
education. This thrust will also respond to the requirements for effectively bridging the transition
in the language of instruction (from Indonesian to Portuguese/Tetun), as well as developing the
curriculum and teaching materials, responding to the goal of creating an East Timorese national
160
identity, in addition to the emphasis on mathematics and the sciences. The key projects for
implementationunder this program are the following.
Curriculum Review and Development
Textbooks and Teaching Materials Development
Language o f InstructionDevelopment (Tetun and Portuguese)
Teacher and Headmaster Training
Rehabilitation and Capacity Building of the Institute for Continuing Education
School Supervision and Improvement
Fundamental School Quality (TFET2)
Project to Redefine Technical-Vocational Education.
National Examinations and Supervision Improvement
Teachers' Career Development and Welfare
IntemationalCooperation and Linkages
100Schools Project (UNICEF-assisted)
Program 3: Build Internal Management Capacityand Improve ServicesDelivery
11.29 The educational system faces tremendous challenges and opportunities which require a
capable and effective service delivery system. Due to a general lack o f experienced educational
managers, sector management capacity can pose a major constraint. There is also a need to
develop physical facilities (such as for logistics) in order to ensure that critical inputs for the
schools system are adequate. Buildingthe internal capacity to formulate policies and plans, and
to identify, prepare and implement responsive projects, as well as facilities development, will
therefore be an important program thrust. Some of the projects identified to respond to this need
are as follows.
a) Training for Educational Managers
b) Project to Build Capacity for Policy Formulation, Planning and Project Development
c) Warehousing Expansion and Logistics Development.
Program 4: Non-Formal Education and Adult Literacy
11.30 A number of surveys have confirmed that adult illiteracy is a major problem that will
pose severe constraints to productivity, growth and family health and welfare. The non-formal
education and adult literacy program i s designed to directly address this problem. Some o f the
specific interventions are as follows.
a) Literacy Campaign
b) Literacy Project for Young Illiterate Women
c) Community ReadingCenters Project
161
d) Distance Learning Project.
Program 5: Develop Tertiary Education
11.31 The University's five-year plan envisages the improvement of tertiary education as an
indispensable and solid nation-building effort in East Timor. It sets out to pursue key parameters
of small size, highquality and gradual financial and government autonomy and has the following
projects.
a) Institutional Strengthening
b) Staff Development
c) Curriculum Development
Program 6: Promote East Timorese Culture and theArts
11.32 To meet the needs of a newly emerging nation, the promotion of East Timor's culture
will be a priority program in the next five years. The thrust of this program will be initially to
structure the state's response to this need by identifying and establishing cultural institutions and
developing their institutional capacity to perform their mandate. The initial projects identified
for this purpose are as follows.
a) InstitutionalCapacity Buildingfor Culture Project
b) Cultural Renewaland Promotion Project
c) Survey and Documentation o f Traditional Culture/Arts Project
Program 7: Promote Youth Welfare
11.33 As a consequence of the demographic structure of the population, East Timor's
population has a large proportion of young people (45% under 15 years old). When combined
with the reality of early drop-out from school o f young people, the country has a large proportion
of youth who are relatively under-employed, unskilled and often barely literate. An important
program thrust of the education plan is therefore to provide youth welfare services and programs
to respond to their needs. Some of the initial projects identified for implementation in the next
five years are as follows.
a) Structuring and Institutional Support to Youth Sector Development
b) Project to Train Unskilled Youth
Program 8: Promote Physical Education and School Sports
11.34 Physical education and sports is an importantingredient for the development of the whole
individual, and therefore a necessary component of the education plan. In view of the relatively
underdeveloped state of this component of the curriculum, the program thrust in the next five
years i s to create awareness of its importance, structure the ministry to provide an adequate
response to its requirements, and undertake basic refurbishment of sports facilities and train
teachers and coaches. Some of the projects identified to implement the program are as follows.
a) Structuring and Capacity-Building o f Sports InstitutionsProject
b) Information CampaignProject on the Importance o f PhysicalEducation and Sports
162
c) Teachers/Coaches Training Project
d) Rehabilitationof Sports Facilities Project.
Program Priorities
11.35 In its expenditure for the financial year, 2002/03, the Ministry of Education has
prioritised funding on programs 1 and 2, on improving the quality of education, expanding
access, and improving internal efficiency. The focus within these funding areas will be on
primary education, followed by junior and senior secondary education, respectively. Following
these, the next priority areas for funding are from program area 4, for continuing and non-formal
education, with the emphasis on improving levels o f adult literacy. Details are provided in the
Summary o f Expenditures for the Education Ministry, contained in the 2002/03 Budget
Submission, accompanying the Plan.
Health
11.36 The Ministry of Health will implementthe following programs and projects.
Program 1: Child Health
Child Health
Expanded Programof Immunisation
Nutrition
Growth Monitoring
Micronutrients distribution
Food Supplementation
Breast Feeding
Health Education on Good Nutrition
Program 2: Maternal Health
a) Ante-Natal Care
b) Safe Motherhood
Program 3: Reproductive Health
Program 4: Health Promotion
a) School Health Program
b) Media and Public Health Campaigns
Program 5: Communicable Diseases Control, including:
a) TB
b) STD/HIV/AIDS
c) Malaria Control
163
d) Disease Surveillance and Response
e) Diarrhoealdiseases
f) Leprosy
Program 6: Environmental and OccupationalHealth
a) EnvironmentalHealth Promotion
b) Occupational Health and Safety
Program 7: SpecialisedServices Programs
a) Integrated Mental Health
b) National Oral Health
c) Hospital Services
d) Ambulance Service
e) Disaster Preparedness
Program 8: Medical Supplies Program
a) Essential DrugsProgram
Program 9: Laboratory Services
a) Central Laboratory Services
b) National Blood Transfusion Service
Program 10: Health Facilities Rehabilitation and Development
Program 11:District Health Services
Program 12: Health Sector and Management Programs
Program 13: Health Policy and Planning Development
a) HealthPolicy and Regulation
0 Establishment of Regulatory Mechanisms
0 HealthPolicy Framework
0 Strategic Planning
0 Inter-SectoralCo-ordination.
b) Human Resources Development
0 Training and Scholarship Program
0 Strengthening of Training Institutions
164
0 Establishment of National Institute of Health Sciences
c) Health Information System
0 Establishment of National Health Information System
Program 14: Support to Administration and Finance functions
a) Administration
b) Finance
c) Logistics
The SecondHealthSector RehabilitationandDevelopmentProject
11.37 Within the program areas listed above, the Ministry of Health currently i s focusing on the
Second Health Sector Rehabilitation and Development Project, that is, on the project as set up in
the second phase o f TFET. The objectives of this project are to assist the Ministry of Health in
rehabilitating and developing a cost-effective and financially sustainable health system in East
Timor, responsive to the immediate basic health needs of the population and, within a well
integrated and sustainable health policy framework, to prepare the health system to meet future
needs.
11.38 The project has three main components and sixteen sub-projects, for which the Ministry
i s requesting funding. These components are as follows.
Component 1: Support to ongoing Health Service Delivery
11.39 This component will support the delivery o f health services, including selected high
priority activities (immunization, tuberculosis treatment, nutrition, and health promotion) and
basic services (including maternal and child health), in accordance with district health plans,
medical supply systems, logistical systems, and essential hospital care, through the provision of
technical assistance to the Ministry of Health. The project will also support the provision of
pharmaceuticals to health facilities, including hospitals.
Component 2: Improvement of the Range and Qualio of Health Services, and the
Development and implementation of Health Support Systems
11.40 This component will support the improvement of the quality of basic health services
provided at the district level, including the enhancement o f health promotion activities,
environmental health, communicable diseases surveillance and reproductive health, through the
provision of technical assistance to the Ministry o f Health and the provision of training to health
services staff. It will also include the rehabilitation, construction and equipping of hospitals, and
the improvement o f communication systems and transport between health facilities and
hospitals. The project will further support the establishment o f an autonomous medical supply
entity, and the provision of technical assistance for management.
Component 3: Development and implementation of Health Sector Policy and Management
Systems
11.41 This component will support the development o f health sector policy, health management
systems and capacity buildingthrough technical assistance for health studies, the development of
a strategic plan for human resources, the provision o f fellowships, and the development of
administrative and financial systems.
165
11.42 Details o f the fundingrequired for financing the development of these projects in 2002-3
are provided in the summary of expenditures for the Ministry o f Health, contained in the Budget
Submission accompanying the Plan.
11.43 The performance indicators for the education and health sectors are summarised in the
following tables.
166
Table 11.1:PerformanceIndicatorsfor Education
1. To raise the population's interest and Number of population participating in
knowledge of basic educational needs educational campaigns.
a) Reduce the number of illiterate people Number of illiterate people (including women)
within the adult population, with an reduced
emphasis on women;
b) Enforce community and NGO Number of children enrolling in pre-schools
participation, particularly regarding increased
implementationof pre-school education; Number of pre-school facilities increased
2. a) Increase the access to education as well Number of student drop-outs, including girls,
as school retention of children of both reduced
sexes within school ages;
b) Improve drop-out rates at all educational Number of children repeating school years
levels and in all social and sex groups reduced
3. Rationalizethe school network Teacherkudents ratio
4. Improve the educational process at all levels, Number of teachers using Portuguese language
from pre-school to university, focusing also increased
on professional training for all, including Course results improved
girls and women, adults, and groups with Ratio of success
special needs.
5. Increase the efficiency of schools and the Punctuality of teachers increased
educational system. Educational managers in districts and central
offices trained
Reduction in the number of international
assistants.
Relationship between school and first
employment
6. Compulsory sports education in schools. Intensive sports programs established in schools
7. Develop a curriculum appropriate to Quality assurancefor delivery of curriculum
contemporary needs, reflecting indigenous
culture and the values of democracy, self-
sufficiency, nationalism and non-
discrimination.
~~~ ~
8. Improve youth qualifications, particularly for Number of unemployed youth finding
those who have left school early, and for the employment
unemployed, through professional training Duration inoccupation
9. Develop extra-curricular occupational Level of youth participation in social and
programs; cultural activities increased
10. Develop culture and the arts, based on the Number of documents and cultural data
national identity of East Timor available increased
11. Developing Tetun and Portuguese as the Number of students speaking Tetun and
national & official languages Portugueseincreased.
167
Table 11.2: PerformanceIndicatorsfor Health
1,To reduce maternaland infant mortality MMR(reduced MaternalMortality Rate)
IMR (reduced Infant Mortality Rate)
% of births attended by trained health worker
% of children under 12 months with DPT3
vaccination
% of pregnant women receiving tetanus
vaccination
2. To reducethe incidence of illness and death % populationwith preventable communicable
due to preventable communicable diseases diseases
Numberof people infected with HIV
% of TB cases treated successfully
3. To improve the nutritional status of mothers % of children with low birthweight
and children % of pregnant women with anemia
% of children below weight for age
measurement
% of target population receiving
micronutrients sumlements
4. To improve reproductive health in East Timor Total fertility rate
Contraceptive prevalence
Incidence o f STIs
1 Incidence o f teenage pregnancies
% of women receiving screening tests
5. To ensure that all people have access to % of populationinpatient admission
health services Number of outpatient visits per capita
YO of population within a 2 hours walk to
health facility
% of population utilizing outpatient and in-
patient services
6. To ensure the delivery of a minimum health 70of health facilities that adequately deliver a
care package at all levels of service minimumpackage of healthservices
7. To collaborate with all stakeholders in the Number of inter-sectoral activitieslprograms
health sector to achieve the national goals Mechanisms and forums established
for health. Number of ioint dans with other stakeholders
8. To ensure that sufficient health professional Number of health workers trained in specific
training i s undertaken to meet national areas
requirements and regulate the employment Regulatory bodies established
of all health professionals to ensure YOof health facilities with adequate staff
minimumstandards of professional practice.
9. To provide sufficient referral and tertiary Referral system developed
health care services, including laboratory Number o f referral facilities with adequately
support services, to ensure that referral cases providing referral services
are treated effectively
10. To improve the organization and % of policies, regulations, guidelines and
168
management system in the health sector protocols developed
11. To increase women's access to information 5% of women with access to information and
and to quality health services quality health services
Number of women utilising services
12. To increase the availability of mental and Number of mental and dental health workers
dental health services trained
Number of districts providing mental and
dental services
13. Environmental and occupational health % of the population with access to safe water
% of the population with access to sanitation
Incidence of occupational health hazards
Number of strategies, plans and regulations
developed with other sectors
Gender Mainstreaming
The indicators presented in the table below will be used to monitor gender mainstreaming on
education and health policies, programs and projects as well as assist in the measuring of gender
needs assessment. These indicators are complementary to those presented by the Health and
Educationsectors.
Table11.3: Gender MainstreamingPerformanceIndicatorsinEducation
ndic
1. To raise the population's interest in, and Targeted community information promoting
knowledge of basic educational needs the benefits of female education
% of women participants in educational
campaigns
a) Reduce the number of illiterate people Ratio of literate females to males
within the adult population, with the
emphasis on women;
b) Enforce community and NGO's Frequency of use of local role models and
participation, particularly in the women's groups advocating female education
implementation of pre-school education;
2. a) Increase educational access for all Ratio of girls to boys in primary and
school-age children. secondary education
b) Improve retention rates at all educational Sex disaggregated data on participation and
levels, for girls and boys, and in all retention rates
social groups
3. Rationalise the school network % of female teachers
Distance from facilities
4. Improve the educational process at all levels Level o f enrolment at all grades by gender
from pre-school to university, focusing also Sex disaggregated data on levels of
on professional training for all, including educational attainment in subject areas
girls and women, adults, and groups with Frequency o f school attendance and retention
special needs. at all grades by sex
169
5. Increase the efficiency of schools and the Type and number of education schedules
educational system. Relationship between school and first
employment disaggregated data by sex
~~~
6. Compulsory sports education in schools. Separate and adequate dressing rooms and
toilet facilities for girls and boys
Types of sports
7. Develop a curriculum appropriate to Extent of gender stereotyping (in curricula
contemporary needs, reflecting indigenous and education material)
culture, democracy, self-sufficiency, Number of workshops for teachers on non-
nationalismand non-discrimination. discrimination
8. Improve youth qualifications, particularly Sex disaggregated employment profile
for those who have left school early, and for Number and type of enrolment profile on non-
the unemployed, through professional formal education courses
training
Table11.4: Gender MainstreamingPerformanceIndicatorsinHealth
Performanceindicator
1.To reduce maternal and infant mortality HIV prevalence rate in 15-35 year old
pregnant women
c7c of reported cases of domestic violence
against pregnant women
4. To improve reproductive health inEast Timor Inclusion of men in health education
actiiities, in particular reproductive health
47c of male beneficiaries of reproductive health
care
8. To ensure that sufficient health professional Sex disaggregated data on the numbers and
training i s undertaken to meet national training levels of male and female health
requirements, and regulate the employment of workers
all health professionals to ensure minimum
standards of professional practice.
11.To increase women's access to information, 9i of women with access to information and
and to quality health services quality health services (IEC Programs)
9% of female health workers available for
consultation with women.
Number of women utilising services
12. To increase the availability of mental and Number of female health workers specifically
dental health services trained in mental health, particularly on
gender based violence
170
12.AGRICULTURE, FISHERIESAND
FORESTRY
"Inthe medium-termthe agricultural sector, more thanmost, provides
opportunities for economic growth, exports, employment and improvements in
social welfare throughout East Timor."
12.1 By 2020 East Timor will have sustainable, competitive and prosperous
agricultural, fisheries and forestry industries that support improved living
standards for the nation's people.
12.2 The agriculture sector comprises crop and livestock activities, fisheries
and forestry. The sector i s pre-eminent in East Timor, with the majority of the
population deriving their livelihood from agricultural activities.
12.3 Prior to the violence that followed the September 1999 Independence
Referendum, agriculture and its support industries employed more than 85% of
the workforce, contributed 40% of GDP, and earned 90% of foreign exchange,
mostly from coffee exports. Exports included coffee and live cattle, along with
illegal exports of sandalwood. The key position of agriculture in the economy
means that there remains a strong imperative to rebuild the sector for reasons of
food security, employment and income generating opportunities. In the medium-
term the agricultural sector, more than most, provides opportunities for economic
growth, exports, employment and improvements in social welfare throughout East
Timor.
12.4 The Ministry o f Agriculture and Fisheries (MAF) i s the Government
agency with prime responsibility for the sector and its development. The private
sector and NGOs are also very important to the future development of the sector
and will provide many of the support services plus the commercial services
required by agriculture, fisheries and forestry. Donor support for the sector was
strong in the post-1999 period and the continuation o f such support i s critical in
the medium-term.
12.5 The structure of MAF i s as shown in Figure 12.1, with the development
programs and other activities implemented and administered predominantly on a
Departmental basis. The activities and responsibilities o f each Department or
other functional area are as follows.
a) Administration ; includes Finance and Budget Support Services,
Agricultural Planning, Bilateral and Multilateral Coordination, and
Administration and Operational Support Services.
b) Policy and Planning Unit: the agricultural sector's role as a key
economic and social sector in the nation demands that the Ministry
i s able to formulate appropriate policies for the sector. MAF needs
also to be capable of planning programs and projects that support the development
o f agriculture. At the time of preparing the Plan this Unit had been proposed but
neither staff nor financial resources were available for implementation. This is an
important Unit that requires initial support from a donor agency.
Department of Agriculture and Livestock: includes the Divisions of Crop
Production, Horticulture, Livestock, Irrigationand Water Management.
Department of Forestry: includes Programs of Reforestation and Forest
Rehabilitation, Forest Protection and Resources Management, and Forest
Production and Utilisation.
Department of Fisheries and Marine Environment: includes Programs of
Fisheries and Marine Environment Management, Fisheries Industry Development,
and Aquaculture.
Research and Extension Centre: includes Programs of Geographic Information
System (GIs), Information and Extension, and Research Laboratory.
A separate Cadastral Unit.
Three Regional Offices.
Figure 12.1: Structure of the Ministry of Agriculture and Fisheries
i-Minister
Policv & Plannina Unit
Department of Fisheries
Aariculture & Livestock & Marine Environment
I Researchand 1 Cadastral Unit
Extension Centre D
1 Regions I, II, 111
Poverty and the Agriculture Sector
12.6 Data from the poverty assessment undertaken in 2001 showed that agriculture is the main
source o f income in 94% of sucos, that 97% of sucos have farms, and that 57% have some
irrigation. It was also found that the crops produced were predominantly used for self-
consumption (subsistence), with less than 20% of sucos selling most o f their rice or maize.
Consequently, it appears that there i s little surplus agricultural production in the nation. The cash
172
income of farm families in 2002 is generated mainly by the sale of chickens, pigs, eggs and some
vegetables.
12.7 Analyses of poverty data indicate that food insecurity i s faced by 18.6% of the
population, or more than 154,000 people in East Timor. Furthermore, preliminary results from
the Countrywide Consultation point to concern about food shortages and the need to increase
both the quantity and quality o f food crops.
12.8 The PA also serves to indicate that 41% of the population suffers from poverty, with
those in rural areas more likely to be experiencing poverty. Agricultural policy and strategies,
therefore, need to recognise the likelihood of seasonalfood shortages and accord suitable priority
to programs to overcome those shortages. Based on concern about food shortages, the medium-
term development policy could focus on a goal of reducing poverty and food insecurity. The
policy instruments to do so, however, require careful consideration. Strategies such as education
and training, complemented with applied research and field demonstrations will improve farmer
knowledge o f adaptive technology. These are key platforms in the MAF's development
programs. In addition, better access to inputs, along with improved access to markets via
improved infrastructure will increase productivity in the medium to long term. Ultimately,
economic growth provides the best solution to poverty, so that sustainable productivity
improvements in agriculture, supporting increased employment and incomes, provides the best
way forward.
12.9 Agriculture, particularly coffee, was responsible for more than 90% of export income
during the Indonesian administration. Since 1999, however, the world price o f coffee has
slumped to historic lows, while inadequate quality control and poor crop husbandry typify the
local industry. This serves also to highlight the narrow base o f agricultural production for
exports, although domestic production of food crops i s well diversified. At present, East Timor
has little or no comparative advantage in relation to the export of agricultural commodities.
Current wage levels and the use o f the US dollar as the medium of exchange render East Timor
internationally uncompetitive on price alone. While MAF has an important role in this respect,
so too do other arms o f Government, such as the MoF.
12.10 The private sector has a vital role to play in the development of agriculture - including
fisheries and forestry - in areas such as infrastructure development, transport, storage,
manufacturing and processing, marketing, contract services, and the supply of inputs.
12.11 The production of agricultural produce in East Timor i s indicated by reference to Table
12.1. As shown in the table, there appear to be inconsistencies in the data reported. The Poverty
Assessment was, however, based on an extremely robust sample that provided data considered to
be very reliable. It i s these data that are considered to be most credible.
173
Table 12.1: Crop Productionin 1997and2001
Commodity Production Yield Production Yield Production Yield
(tons 1997) (tonsha (tons2001) (tonsha (tons2001) (tonsha
Indonesia 1997) MAF 2001) TLSS 2001)
Food Crops
Rice 40,286 2.7 38,340 2.9 54,302 1.54
Maize 106,600 1.8 113,527 2.0 68,959 0.57
Peanuts 3,200 1 .o 3,301 1.1 1,677 0.51
Soybeans 1,200 0.8 821 0.39
Cassava 66,500 4.0 68,237 4.2 55,349 0.61
Sweet Potato 16,200 3.9 43,976 4.1 31,663 0.47
Tree Crops
Coffee dry bean 9,700 0.2 9,491 0.405 14,984 0.52
Coconuts 9,900 0.2 8,040 0.702 2,137 1.01
Candlenut 690 0.2 1,063 0.472 n.a. n.a.
Cocoa 42 0.08 n.a. n.a.
Cloves 12 0.05 n.a. n.a.
Sources: Indonesian Central Bureau of Statistics, Livestock Service of East Timor, UNTAET, MAF's estimates. The 2001 TLSS.
12.12 MAF's Mission is to efficiently deliver services to agricultural, fishing and forestry
communities in East Timor, services that support improved productivity, income earning
potential and exports and that, therefore, support improved social welfare in the rural areas of the
nation, taking account o f MAF's human, capital and financial resources.
12.13 The goals of MAFare to:
achieve food security and improve food self-sufficiency;
diversify agricultural production and increase export earnings by the sector;
develop agriculture predominantly on the basis o f an integrated farming systems
approach;
facilitate agro-industrial development leading to increased processing and value-
adding in-country;
improve the quality of agricultural commodities produced inthe nation;
manage agriculture, fisheries and forestry resources in a way that supports
sustainable production; and
increase rural incomes, generate employment in rural areas and, consequently,
reduce poverty and improve the welfare o f rural communities.
12.14 The key guiding principles for development of the agriculture, fisheries and forestry
sectors are as follows.
Sustainability
Agricultural, fisheries and forestry production activities will use natural, social and financial resources in
a sustainable manner. This will be based on the well-known definition of sustainability from the 1983
World Conservationand Environmental DevelopmentConference, which states:
"sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs."
Efficiency
Agricultural, fisheries and forestry resources will be used in a manner that prevents waste,
ensures they are employed in a cost-effective way, and maximises community benefits from their
use4.
Equity
All farmers and fishers will have the same access to the services provided by MAF and other
Government agencies, while the benefits of development will be distributed fairly across the
nation and between generations.
Self-reliance
Government will encourage private sector initiatives and provide a conducive policy
environment and support services to make agriculture and fisheries profitable and globally
competitive.
Values
The values of East Timorese will be considered in development programs, which will take
account of, and respect, cultural values and traditional practices such as farmers working
together in crop production (serbisu hamutuk).
Participatory Development
Decision-making by MAF will be undertaken in consultation with major stakeholders in the
sector.
EN RS
12.15 The key development indicators for the agricultural sector are as follows.
a) Increased food production, rural incomes and per capita nutritional intakes. The
increase in food production i s possibly the most critical indicator. It will be
Efficiency has two aspects: allocative efficiency, requiring that the net benefits to the community from the use of resourcesare maximised; and
productive efficiency, requiring that the technically most efficient (and least wasteful) mix of resources is used in production.
175
measured by both the overall amount of food production and food production per
ho~sehold.~
Increasedtotal area (hectares) planted to new crop varieties.
Higher incomes and employment among farmers adopting a farming systems
approach.
Increased foreign exchange earnings from exports of quality agricultural and
fisheries products.
Higher proportion of irrigatedland relative to total arable land
Higher crop yields and productivity due to intensification, adoption of new
varieties, farmer training, and improved genetic stock in livestock, aquaculture and
fisheries.
Increased number of Agricultural Service Centres, along with production and post-
production infrastructure.
Quality standard improvements in agriculture and fisheries products.
Increasednumber of livestock volunteer workers, water user associations and other
farmers' associations.
New protected areas through improved resources management and development,
terrestrial and marine parks, law enforcement and information dissemination,
Enhanced forestry and fisheries products' utilisation.
Increased production and quality of fishery products due to training, improved
harvest and post-harvest fish handling and infrastructure development.
12.16 The critical problems and constraints faced by MAF and the nation in relation to
development of the agriculture sector include the following.
Capacity
MAFcurrently faces a lack of institutional and personnel capacity to undertake the wide range of
tasks with which they are confronted, including the implementation, management and
monitoring of donor-funded activities. The planned increase in staff numbers in 2002/03, along
with capacity building for staff will address these issues to a partial extent.
Managementand Entrepreneurial Skills
Farmers and fishers in East Timor are typified by low levels o f management skills and
entrepreneurial ability. This i s a capacity constraint in the private sector component o f the sector,
These two indicators relate food security at national level to food security at household level. The former measures the gross increase in food
production while the latter measuresthe equitable distribution of increases in food production.
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DataandInformation
As stated in the Introduction, doubts remain about the veracity of the data which MAFhas at its
disposal. This imposes a constraint on planning and development in the sector. Results of the
2001Poverty Assessment will be helpful in this context, but further, regular data collection will
be important to policy and programdevelopment.
FinancialResources
MAF, like other Ministries, faces severe budgetary constraints for staffing, other recurrent costs
and capital equipment. Therefore, it will continue to rely on donor support in the medium term
to establish both a stock of needed capital equipment and a cadr6 of suitably trained staff.
Poor Transport,Communication,MarketingandProcessingInfrastructure
Many sucos and aldeias cannot be reached by vehicles, and the majority have little or no
communication facilities other than transistor radio. This imposes constraints both on
development programs and extension activities, while also hindering the marketing of produce
by isolated communities. Furthermore, value-adding i s constrained by a lack of processing
facilities.
Low Productivity
Agriculture in East Timor i s typified by low productivity with, for example, average rice yields
around 1.5 tons per hectare (compared, say, to the Philippines where average yields are around 4
tons per hectare). Low productivity results from farmers' shortage of cash, low input systems,
inadequate knowledge of alternative production systems the continued use of traditional
cultivation techniques, zero or minimal fertiliser use, and high seeding rates to guard against
losses. Farm practices are also typified by risk-averse behaviour as farmers attempt to guarantee
food for their families, which i s rational under existing farming circumstances. Increasing
productivity through introducing appropriate changes to production systems comprises one of the
biggest challenges for MAFand its Department of Agriculture and Livestock.
Poor QualityProduce
The quality of agricultural commodities produced in East Timor i s generally quite poor. This
reduces farm incomes and competitiveness inboth domestic and international markets.
State of IrrigationSchemes
Irrigation schemes were extensively damaged in 1999, although many were already in a poor
state, due to lack of maintenance and weak structure. Water shortages and poor management are
typical and, amongst other things, result in irrigated rice normally grown only as one crop per
year.
LandTenure
Lack o f clarity about land tenure presents a constraint on commercial agricultural development,
as well as on various support services that require access to land to become established. The
current situation relating to land tenure remains to be ascertained in accordance with the
Constitutionof the country, but i s currently typified by great uncertainty. There i s no proper land
registry, no recording or verification of land transactions, no transparent system for allocating or
governing foreign interests in land use, and no framework in which to determine competing
claims to land.
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ComparativeAdvantage and Diversity
The principal export in past years from East Timor has been coffee. The current state of the
international coffee market means, however, that the industry i s currently non-viable. East
Timor coffee formerly had a reputation as a quality product, but this reputation has been
damaged in recent years by poor post-harvest handling and processing and the subsequent
placement of an inferior product onto the intemational market. Furthermore, husbandry of the
crop, in general, i s poor to non-existent, leading to reducedproductivity and quality. The present
use of the US$ means also that East Timorese exports are expensive on world markets - the
nation has virtually no comparative advantages in intemational trade at the present time. Finally,
the parlous state o f the coffee industry shows the need to diversify the export base; reliance on
only one or a small number of exports brings with it both price and production risks.
Fisheries Legislation and Management
East Timor i s yet to develop and implement a Fisheries Act and to formulate the approaches to
the management o f various fisheries through fisheries management plans. A precautionary
approach has been taken to the allocation of fishing rights because fish stocks are poorly
understood. There i s an urgent need to address these matters so that the nation can develop its
fisheries in a manner that i s economically, biologically and socially sustainable.
Forest Degradation
The forests of East Timor are in a very poor state, with previous logging activity, firewood
collection, shifting agriculture and defoliation by the Indonesian military each contributing to the
current status of forests. There i s much to be done in terms of reforestation, the declaration and
management of protected areas, and watershed protection. Reforestation i s both long-term and
expensive with domestic fundingunlikely to be able to make a significant contribution to needed
efforts.
Forestry Legislation
There i s currently no forestry legislation, although UNTAETRegulation#2000/19 i s designed to
protect various natural areas, while UNTAET Regulation#2000/17 deals with the prohibition o f
logging and timber exports. There is, however, a need to develop appropriate legislation and
further regulations as soon as practicable.
Quarantine
There i s currently a lack of regulation and services for quarantine in East Timor. This i s
important to the whole nation, but of particular importance as it develops new agricultural
industries, particularlythose with an export focus.
12.17 The overall strategic policy directions for MAF in the next five years are designed to overcome
these problems and constraints.They includethe following.
a) Establish effective and efficient technical support services to assist farm
communities to increase food (particularly rice and maize), livestock and vegetable
production.
b) Introduce and develop new and adaptable technologies such as new cultivars and
other inputs to enhance farm productivity. Such technologies will be complemented
178
with adaptive field experiments, field demonstrations and extensive training for
farmers.
Promote and develop diversification of agriculture through identification of
potential niche markets for East Timor farm commodities in the region and in
Europe and North America. This might include creating incentives to produce
crops such as tropical fruits for both the domestic and export markets.
Maintain and improve the existing irrigation systems for rice, along with other
crops including horticulture and legumes.
Promote the development of a sustainable fishing industry targeting both domestic
and export markets. Such development will be supported by an appropriate
regulatory framework, encouragement for local and foreign investment through
appropriate fiscal arrangements, and protection of the nation's marine resources.
Create services to assist farmers to develop and improve animal production (cattle,
buffalo, goats and poultry). A regulatory framework that enforces appropriate
sanitation standards in abattoirs and processing plants will be formulated.
Develop and implement an extensive vaccination and sanitation campaign to
prevent disease and improve animal production.
Rehabilitate and improve infrastructure, including irrigation systems, silos, roads
and markets. Such activities will be undertaken in conjunction with the
Departments of Public Works and Transport.
Promote crop rotation as critical in crop production systems to maximise profitable
use of agricultural land, thereby increasing farm incomes and also improving soil
structure.
Increase coffee production through the systematic renovation o f coffee plantations
by pruning, or replacement of old trees with new Arabica plants and, where
appropriate, by expanding the area of plantings. Simultaneously, niche markets will
be sought in Asia, Europe and North America.
Promote, develop and improve production from tree crops such as candlenut and
coconut for both domestic and export markets.
Develop and expand the reforestation program to increase forest cover and the
production of commercially valuable trees for the timber industry.
12.18 The development programs and projects of the Ministry are presented under the three
core departments o f Crops and Livestock, Forestry and Fisheries and Marine Environment.
Programs for the GIS and Cadastre Units of the Ministry are shown separately.
179
DEPARTMENTAGRICULTUREAND LIVESTOCK
OF
MissionStatement
Themission of the Department of Agriculture and Livestock (DAL) is to improve the well-being
of farm families through encouraging them to adopt profitable, productive and sustainable
farming practices in relation to both crops and livestock.
12.19 The overarching goal of the DAL i s a highly developed crops and livestock industry
within farming communities typified by progressive and self-reliant farmers who are adopting
profitable, productive, and sustainable farming systems practices. DAL will undertake a farming
systems development approach that strongly recognises existing resource limitations, knowledge,
skill and indigenous technologies. It will undertake its development activities in a manner that i s
specific to each agricultural ecosystem (upland, irrigated lowland, rain fed lowland, sloping
lands, and cool-elevated lands). The focus will be on integrating crops and livestock production,
along with adaptation and promotion of proven, profitable and sustainable farming systems
technologies featuring efficient use of soil and irrigation water.
12.20 DAL consists of four divisions: Crop Production Division, Division of Horticulture,
Livestock Division; and Division of Irrigation and Water Management.
Problems,Goals and Policies
12.21 The key problems confronted by the DAL are the following.
a) L o w productivity, production and value of food crops, cash crops and livestock.
b) Poor animal husbandry and animal health.
c) Irrigation schemes are, overall, in a state of disrepair and road access in rural areas
i s deficient.
d) Transport and marketing infrastructure to serve post-harvest distribution i s limited
or non-existent.
e) The coffee industry i s in urgent need of revitalisation.
f) Lack of know-how about improved agricultural techniques and best practices.
12.22 Consideration of these problems means that three goals are of particular importance to
the DAL. These are to:
a) increase the productivity of the crop and livestock sectors, focusing initially on
rice, maize, fruit and vegetables, coffee and chickens;
b) make more intensive use of agricultural land; and
c) improve the quality o f agricultural produce.
12.23 The three principal policy options for achieving these goals are to:
a) increase informationprovision and training for farmers;
b) ensure the availability of better inputs such as seed and livestock medicines; and
c) rehabilitate irrigation schemes and coffee plantings
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12.24 To put these policies into practice the Department, through its Divisions, will implement
the various programs described below. The projects to be implemented under each program, with
the actual or proposed sources of funding and the current status o f individual projects are as
shown in Tables 12.24 - 12.28.
CropProductionDivision
Program 1: Enhancement o f Food Crops Production
Program 2: Enhancement o f Horticultural Crop Production
Program 3: Enhancement of IndustrialCrops Production
Program 4: Support to Farmers' Associations
Program 5: Crop Protection
Program 1: Enhancement of Food Crops Production
12.25 The goal of this program i s to increase the productivity, overall production and quality of
important food crops grown in East Timor. The program will be focused on food crops, mainly
rice and maize, which are grown by 23% and 81%, respectively, of East Timorese households.
The current low yields and productivity of these two crops results from the use of poor seeds and
varieties that grow poorly under the existing soil and climatic conditions; and inadequate
application o f improved practices that are already tested and continue to be usedby other farmers
in Asia. Program activities will include on-farm demonstrations of certified seed use; improved
production practices, cropping systems and crop diversification; and variety testing and seed
multiplication of newly selected varieties of rice and maize, as well as Phaseolus, mungbean,
soybean, cowpea, sweet potato, peanut, and cassava. The performance targets, after five years of
the program, are as shown in Table 12.2.
Table 12.2: PerformanceTargets, Enhancementof Food CropsProduction:2002-2007
PerformanceTargets (at the end of 5 years) I Measurement
50% reduction in number of months with insufficient Nationalpovertyhutrition surveys
food supply among rural households
Stabilisation of deficit in rice supply National poverty/nutrition surveys and
MAFdata
Development o f 3 model rice villages MAFmonitoring records
Release of new food crop varieties: MAFmonitoring records
- 2 varieties of new irrigated lowland rice
- 3 new varieties o f maize
- 1new variety of mungbean, soybean & cowpea
- 3 new varieties of peanut
- 3 new varieties o f sweet potato and seed
pieces distributed to 5,000 households
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Program 2: Enhancement of Horticultural Crop Production
12.26 The goal of this program is to increase the production and quality of fruit crops grown by
East Timorese for both food and cash. This program does not include the `industrial' crops such
as coffee. A large number of households in East Timor are dependent on the production of
horticultural crops, from the relatively dry lowland areas in the north, to the humid and cool
elevated lands in the mountainous region, through to the relatively humidlowlands in the south.
The recent household poverty assessment showed that richer farmers tend to grow proportionally
more fruit trees than poorer farmers, indicating that development of horticultural production
might have an impact on poverty alleviation. Initial activities include improvement of the
germplasm o f suitable fruit crops, training selected farmers in commercial nursery operation,
conducting on-farm demonstrations about improved cultural practices, and seed or seedling
multiplication o f the best performing newly recommended varieties. Performance targets are
shown in Table 12.3.
Table 12.3: PerformanceTargets, Enhancementof HorticulturalCrops Production
PerformanceTargets (for FY02/03) Measurement
Two plant nurseries (1 in the highlands and 1 in the Crop Production Division records
lowlands) for selected varieties of fruit crops to use as
sources of seeds or planting materials for propagation
and training o f plant nursery operators. Identification
Program 3: Enhancement of Industrial CropsProduction
12.27 The goal of this program i s to enhance and develop industrial crops that will contribute to
income earning opportunities and employment in rural areas, and to export earnings for the
nation, The program will focus on crops that involve value-adding activities and support: (a) the
development of industrial crops such as coffee, candlenut, coconut, sugarcane, Manila hemp, and
vanilla; (b) germplasm collection, identification, and evaluation; (c) seed or seedling
multiplication; (d) on-farm demonstration of best practices in orchard management; (e)
processing o f value-added products; and (f) training o f farmers in nursery and planting
operations.
12.28 An estimated 25,000 farm families derive a substantial portion o f their income from
coffee, while another 15,000 obtain a small portion of their income from the crop. Consequently,
about 40,000 families earn at least some cash income from coffee, meaning that around 200,000
people (given that the average family size i s five persons) or a quarter of the population rely on
the crop for at least a portion of their livelihood. Seasonal off-farm labour is also employed in
the transport and processing o f coffee. While not the only activity, coffee production will be an
important component of the program because the crop i s already grown and well understood.
Furthermore, coffee i s - at least for the present - heavily supported by aid donors and the MAF
program will complement donor activities. Donor support includes:
a) USAID: NCBA Timor Economic Rehabilitation and Development Project
(TERADP);
b) Portugal: Replanting of Coffee Fields and Research on Coffee Production;
182
c) Portugal: Integrated Rehabilitation and Construction of Coffee Processing
Facilities;
d) U SAID: Abaca Pilot in Liquica (under Economic Recovery Program: Agriculture).
Table 12.4: PerformanceTargets, Enhancementof IndustrialCropsProduction:
PerformanceTargets (for FY02/03) Measurement
3 batches of farmers trained in the production of high Crop Production Division records
quality processed coffee
5 demonstration sites on proper rehabilitation of Crop Production Division records
coffee orchards
2 nurseries of selected varieties established I Crop Production Division records
Program 4: Support to Farmers' Associations
12.29 The goal of this program i s to facilitate the marketing of agricultural inputs and products,
through private commercial agricultural associations owned by farmers. This program is being
supported by the TFET-funded Agricultural Rehabilitation Program I(ARPI) and ARP I1
projects, and is helping establish three Agriculture Service Centres (ASCs) in Bobonaro,
Viqueque, and Aileu, each serving 3,500-4,000 farmers. The total beneficiary population i s close
to 10,000 farmers. The ASCs will facilitate: (a) marketing and trading o f agricultural products
(including rice in Bobonaro, candlenuts and copra in Viqueque, and coffee in Aileu); (b) sales o f
agricultural inputs (such as seeds, fertilisers, pesticides, and farm tools): and (c) transport of
agricultural products from farm sites to markets. Apart from staff time, all project costs are met
under TFET funding; MAF staff will play a counterpart role and support the in-field activities of
the program. Performance targets are shown inTable 12.5.
Table 12.5: PerformanceTargets, Support to Farmers'Associations
PerformanceTargets Measurement
Three Agriculture Service Centres established and .ARP I1monitoring records
operational
Agriculture inputs and transportation available, and ARP I1monitoring records
marketing network re-established for nearly 10,000 farmers
Program 5: Crop Protection
12.30 The goal of the Crop Protection Program i s to support the improvement o f food supply at
the household level by controlling common pests and diseases (including weeds) that lead to loss
of yields in the field and during storage of crops. Essential functions include monitoring common
pests and diseases, and informing farmers about how to act in a timely fashion to control
common pests, particularly rats, and reduce their impact. The program will also administer and
operate the plant quarantine program that will prevent entry of new pests and diseases into East
Timor, and regulate the importation and use of pesticides by farmers. Given that this i s an
integrated program, no projects are specified.
183
Performance Targets Measurement
13 groups o f farmers trained on proper use of pesticides, Crop ProductionDivision records
preparation o f pesticide sprays and proper disposal of
pesticide containers.
Regulation on importation and sale of pesticides; plant Crop ProductionDivision records
quarantine regulationdrafted
Regular radio program on pest management, proper use of Crop ProductionDivision records
pesticides and information on hazardous and toxic
agricultural chemicals produced. Trials on eradication of
Siam Weed
Livestock Division
Program 1: Development of Livestock Production
Program 2: Prevention and Eradication o f Livestock Diseases
Program 1: Development of Livestock Production
12.31 The goals of this program are to increase food production, animal protein consumption,
and income through provision of support to farmers in establishing small chicken hatcheries,
increasing cattle production, and improving the marketing of chickens and cattle. Assistance
will be provided to approximately 1,000 chicken owners and 500 livestock owners, with a
particular focus on women in the case of chicken production.
Table 12.7: Performance Targets, Development of Livestock Production
I I I
Performance Targets Measurement
30% increase in total meat and egg production Consumption and nutrition records
from current levels
20% increase incattle population (no. head) Livestock Division records
Program 2: Prevention and Eradication of Livestock Diseases
12.32 The goal of this program i s to improve the animal health and productivity of livestock in
East Timor, leading to increased farmers' incomes. MAF will support the TFET-funded ARP I1
project in the carrying out o f (a) essential vaccination campaigns for cattle, buffaloes, pigs and
chickens; and (b) help develop a system of private Village Livestock Workers (VLW) to provide
assistance to local farmers in basic veterinary services. The target beneficiaries include all the
households owning cattle, buffaloes, pigs and chickens in East Timor, in addition to 200 sucos
where VLWs will be trained. Donor support for this program i s currently available under the
TFET Second Agriculture Rehabilitation Project (ARP 11). The continuation of this program is
an imperative for livestock production in East Timor and the wider region. Activities such as
184
vaccination for Newcastle Disease in chickens will make a significant contribution to poverty
reduction, nutrition and income earning opportunities.
Table 12.8: PerformanceTargets, Developmentof LivestockProduction
PerformanceTargets Measurement
80% of target adult population of buffaloes and Livestock Division Records
cattle (approx. 150,000), and 270,000 pigs
vaccinated
500,000 doses of Newcastle Disease vaccine Livestock Division Records
distributed to communities
IrrigationDivision
Program 1: Rehabilitationof Existing IrrigationSchemes
Program2: Establishment of Rural Water HarvestingSystems
Program 3: Maintenance and Repair Work
Program4: Sector Management Recovery and Development
Program 1: Rehabilitation of Existing Irrigation Schemes
12.33 The goal of this program i s to increase agricultural production in lowland areas and
stimulate off-farm employment through the rehabilitation of community irrigation schemes,
agricultural access roads, and selected irrigation schemes that have suffered light-to-medium
damaged but have been assessed as viable from an economic, social, and environmental
perspective. CFET resources will be used to cover minor operating costs and MAF staff inputs
for the supervision o f these works, which will be funded by TFET-ARP I1 and the
UNOPS/UNDP Urgent Rehabilitation I1Project. The target beneficiaries are estimated at 18,500
rural households. Increased rice production from the rehabilitation of the larger irrigation
schemes i s estimated to benefit about 2,200 farming families. Donor support includes:
a) TFET Second Agriculture RehabilitationProject;
b) UNDP/UNOPS Urgent Rehabilitation 11; and
c) CIDA -Rehabilitationof Water Irrigation Channel inIliomar
Table 12.9: PerformanceTargets, Rehabilitationof ExistingIrrigationSchemes
PerformanceTargets Measurement
Rice yield increasing from 1.5 to 2.0 MT/ha at the Irrigation Division monitoring records and
end of the first year, 2-4 MT at the end o f 3 years, field surveys
and increasing to more than 4.0 MT/ha after five
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Program 2: Establishment of Rural Water Harvesting Systems
12.34 The goal of this proposed new program i s to improve the reliability of irrigation water
supplies for upland communities, which are particularly vulnerable to water shortages during the
dry season. The program will be piloted in two communities during FY02/03, using a limited
CFET budget of $5,000 for the construction of vaults and tanks in vegetable areas in the
highlands of East Timor. Based on lessons learned from this pilot, the program will be expanded
into a specific project in FY03/04.
Table 12.10: PerformanceTargets, Establishmentof RuralWater HarvestingSystems
PerformanceTargets Measurement
Construction o f small irrigation water tanks Irrigation Division monitoring
and vaults in 2 d o t communities records
Program 3: Maintenance and Repair Work
12.35 The goal of this program i s to provide essential maintenance and repair for irrigation
schemes rehabilitated in previous years under donor-funded projects. The costs o f annual
operation and maintenance of irrigation schemes are estimated at about 10% of the capital
investment. While most of the schemes rehabilitated in the past have been community tertiary
canals, meaning that operation and maintenance costs are bome by the community, there i s a
need to allocate modest CFET funding (US$45,000) to essential maintenance and repair. The
targeted beneficiaries would be communities.in a 7,700 ha area previously rehabilitated under
ARP I.
Table 11.11: PerformanceTargets, Maintenanceand Repair Work
Performance Targets 1Measurement
Maintenance and repair work covering 2,100 IrrigationDivision monitoring records
hectares
Program 4: Sector Management Recovery and Development
12.36 Under this program, the MAF Irrigation Division will complete two essential policy
studies, one on Water Users Associations, and a second on broader Water Management Policy.
These studies will develop the Government's policy towards operation and maintenance of
irrigation schemes, such as the share of communities' responsibilities for the schemes, and the
incentives and policies influencing the use o f water, one of East Timor's most critical natural
resources. MAF staff will contribute to the formulation of these essential policies, Donor support
for technical aspects i s provided under:
a) TFET: Second Agriculture Rehabilitation Project
186
Table 12.12: PerformanceTargets, Sector Management Recovery and Development
Performance Targets I Measurement
Two draft policy documents on Water Irrigation Division monitoring
Users Associations and broader Water records
Management Policy
DEPARTMENTFISHERIESAND MARINEENVIRONMENT
OF
Mission Statement
The mission of the Department of Fisheries and Marine Environment (FME) is to lead
sustainable development of thefishing and aquaculture industries in East Timor and ensure they
play a signif cant role in nationalfood security and income generation.
12.37 The overarching goal of the FME i s to lead the development of the nation's aquatic
resources in a sustainable fashion, while providing opportunities for coastal communities to
benefit from such development. Current and planned development i s based on the Strategic Plan
for the Fisheries of East Timor. The Strategic Plan addresses major issues facing the fishing
industry, including: (1) the declaration of fishing boundaries between East Timor, Australia and
Indonesia; (2) the licensing of offshore commercial operations; and (3) the definition of East
Timor's various fisheries. The FME will focus on: (a) training for capacity building; (b)
development of appropriate administrative protocols to ensure coordination of all fisheries
programs and activities; (c) maximising the value of the catch by improving fish handling,
transport, storage, processing and marketing; and (d) upgrading the database of fishing capacity
held at FME.The FME will also work with Legal Affairs and other Government departments to
ensure that a fishing zone for East Timor i s defined, declared and ratified as soon as practicable.
Problems, Goals and Policies
12.38 The key problems confronted by the Department are the following.
No Fisheries Act and legislation
No fisheries managementplans
No international maritime boundaries
Lack o f staff skills
Lack o f fisheries data
Underdeveloped fresh water and marine and brackishwater aquaculture sector
No fisheries monitoring capability or activities at present
Facilities destroyed in September, 1999
Lack o f shore-based industry
Under-developed harvest sector
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12.39 Based on these problems, the goals of the FMEare to:
establish and implement a Fisheries Act and accompanying legislation;
establish a profitable private sector-based fishing industry that maximises
sustainable economic returns to East Timor;
establish a viable aquaculture industry;
provide sustainable marine recreational activities for the recreational fishing,
charter fishing and dive tour sectors;
assert jurisdiction and control over the living marine resources in the seas of East
Timor;
develop the capacity of the staff of the FME;
sustain and enhance the aquatic resources of East Timor and their supporting
ecosystems; and
operate an efficient and accountable FME.
12.40 The policy options for achieving these goals include the following:
develop appropriate legislation, regulations and management instruments for
sustainable development of fisheries in East Timor;
develop each fishery via a step-wise, precautionary approach;
develop fisheries-specific management and development plans consistent with the
principles o f ecologically sustainable development (ESD);
establish a responsive extension system that works closely with commercial,
private and subsistence fishers;
provide a regulatory system that promotes community-based management for reef
and coastal fisheries, including the development of local by-laws that protect the
interests and user-rights of the community;
rehabilitate the former government run Ikan Mas hatcheries, and supply assistance,
technical advice, and fish fry to local fish farmers on a cost-recovery basis; and
provide staff training across the full spectrum o f fisheries-related disciplines,
including socio-economics and sustainable fishing practices, thereby upgrading
staff skills to meet the needs of a modern fisheries sector.
12.41 To put these policies into practice the FME will implement the programs described
below. The projects to be implemented under each program, with the actual or proposed sources
of funding and the current status of individual projects are as shown in Table 12.26.
Program 1: Fisheries and Marine Environment Management
Program 2: Fisheries Industry Development
Program 3: Aquaculture
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Program 1: Fisheries and Marine Environment Management
12.42 The goals of this program are: (a) the creation of a policy and legislative environment,
backed up by appropriate stock assessments, monitoring and data that supports sustainable
development of East Timor's fisheries; and (b) co-management of fisheries resources, involving
coastal communities, the Department and other stakeholders. CFET funds will be used
predominantly for staff inputs, with staff working mostly on programs that are supported by
donors. The support from donors i s received under:
a) AusAID: Fisheries Management Planning
b) AusAID: Survey o f Nearshore FishStocks - DiliHarbor
c) TFET: Second Agriculture Rehabilitation Project
Table 12.13: PerformanceTargets, Fisheriesand MarineEnvironmentManagement
PerformanceTargets (atthe end of 5 years) Measurement
50% overall increase in production Records of catches at landing sites
25% increase in industryemployment National employment surveys
Program 2: FisheriesIndustry Development
12.43 The goal of this program i s to facilitate the development of the fisheries sector in East
Timor so that it contributes to economic growth, incomes, employment and export earnings. The
program builds on the initiatives in Program 1by supporting the growth of a commercial fishing
industry based on the legislation, regulations, management protocols and marine boundaries
promulgated under that Program.
Table 12.14: PerformanceTargets, FisheriesIndustryDevelopment
PerformanceTargets (at the end of 5 years) Measurement
Quantum of facilities re-established Monitoring of rehabilitation
Increase in annual revenues from leasing o f services Income realised by the Government from
at the fishery port the port & its operations
Program 3: Aquaculture
12.44 The overarching goal o f this program i s to develop and expand a local aquaculture
industry, both freshwater and marine, to enhance food security and add to local and export
incomes. The program i s comprised o f one project at the current time, with a principal goal to
make fish fry available so that the aquaculture industrycan redevelop in East Timor and become
an important provider o f food, incomes and employment. Prior to the 1999 violence five fish
hatcheries were owned and managed by the East Timor Fisheries Authority. These hatcheries
supplied fish fry to both small and large fish farmers. Without at least one freshwater fish
hatchery and one marinebrackishwater hatchery, East Timor runs the risk o f losing potential
investment and employment opportunities. Revenue from fish farming would not be realised and
189
food security issues heightened. Ultimately, the aim i s that the management and operation of
such facilities will be taken over by the private sector with FME providing research and other
professional inputs,but not taking any commercial risks.
Table 12.15: PerformanceTargets, Aquaculture
1
PerformanceTargets Measurement
Expansion inthe aquaculture industry Annual aquaculture production
Number o f privatised hatcheries Number of hatcheries in the nation
DEPARTMENTFORESTRY
OF
MissionStatement
The mission of the Department of Forestry (DoFj is to ensure the sustainable management of East
Timor 's forest resources through effective planning, capacity building, community participation and the
formulation of appropriate policies and legislation.
11.45 The overarching goal of the DoF i s to develop appropriate policies, legislation and
management strategies as the basis for the formulation and implementation of forestry
management plans to facilitate the sustainable management of forest resources in East Timor.
DoF will work with other stakeholders, including rural communities who are reliant on forest
resources, in its management and development programs. The Department will, therefore,
encourage the participation o f rural communities and other stakeholders in all aspects of
sustainable forest resources management in the nation.
Problems,GoalsandPolicies
12.46 The key problems confronted by DoF are the following.
a) N o forestry legislation and minimal regulation
b) Inability to police those regulations that do exist
c) N o forestry management strategies yet inplace
d) Lack of staff capacity and skills
e) Lack of forestry data
f) Collection o f firewood and lack of action on watershed protection
12.47 Consequently, the goals of the DoF are to:
a) collect and analyse information on forestry resources in East Timor, to be used as
the basis o f planning and decision making;
b) develop essential forestry policies, legislationand management strategies;
c) prepare a Forestry Master Management Plan and develop and implement Action
Plans based on that Plan;
190
d) buildthe capacity of the national staff to implement forestry programs;
e) promote reforestation and sustainable land management practices in East Timor for
erosion control, soil rehabilitation, watershed protection and subsistence use;
f) provide effective and efficient management programs for sustainable forestry, with
emphasis on forest lands, their resources, and protected natural areas; and
g) develop strategies that could encourage the participation of rural communities and
other stakeholders in planning and decision making related to forest resources
management.
12.48 The policy options for achieving these goals include the following:
a) develop appropriate legislation, regulations and management instruments for
sustainable development of forestry inEast Timor;
b) develop forestry management and development plans consistent with the principles
of ecologically sustainable development (ESD);
c) promote and support community-based management o f forest resources and water
source areas;
d) support staff training across the full spectrum of forestry-related activities;
e) establish the protocols and facilities for the collection, collation and analysis of
forestry data; and
f) support the development of a number of protected natural areas throughout East
Timor.
12.49 The Department will implement the various programs described below in response to the
needs summarised above. The projects to be implemented under each program, with the actual or
proposed sources of funding and the current status of individual projects are as shown in Table
12.24.
Program 1. Reforestation and Forest Rehabilitation
Program2. Forest Protection and Forest Resources Management
Program 3. Forest Productionand Utilisation
Program 1: Reforestation and Forest Rehabilitation
12.50 The aims in this program are to: (a) reforest degraded areas in East Timor with valuable
local timber species, in particular sandalwood; (b) restore the ecological balance o f degraded
areas and arrest the environmental problems resulting from their degraded condition (while
promoting the development of forest resources in those areas); and (c) encourage community
participation in the rehabilitation of East Timor's degraded forest areas. Reforestation i s an
immediate response to widespread upland degradation. An estimated 85% of upland areas are
denuded and devastated due to forest fires and non-environmental friendly upland management
(including widespread collection o f firewood). In line with this, Agro-forestry techniques are
considered an alternative to slash and bum cultivation, as farmers are able to produce forest
trees, fruit trees, and cash crops, including livestock. Aside from the uplands, mangrove areas
191
have been exploited for fuel wood and other products, Mangroves play a major role as coastal
habitats and hence are a priority for rehabilitation. Donor support for this program comprises:
a) TFET: Second Agriculture Rehabilitation Project (Pilot Participatory Development
and Natural Resources Management
b) Portugal: Reforestation and Alternative Cash Crops
c) CIDA: Tree Nursery, Reforestation and Agroforestry in Seloi
d) CIDNCARE: Community-based Natural Resources Management in Covalima and
Dili
Table 12.16: PerformanceTargets, ReforestationandForest Rehabilitation
~
PerformanceTargets Measurement
No. of hectares of reforested upland and Forestry Division monitoring records
rehabilitated mangrove areas
No, of partnerships between NGOs and MAF staff Forestry Division monitoring records
No. o f Participatory Action Plans for Natural Forestry Division monitoring records
Resource Management
12.51 This program is focused on the protectionand conservation of the forest resources of East
Timor, through: (a) increased public awareness; (b) development of a framework for
management o f watershed areas; and (c) protection and conservation o f the biodiversity and
socio-cultural significance of important natural sites. The program will cover projects in the
areas o f watershed management, protected natural areas (PNA), and public information, building
upon the existing watershed management activities started by MAF in FY01/02. Target
beneficiaries include the communities within the targeted watershed and protected areas, farmers
wishing to use resources of the protected area and East Timor in general through the protection
o f its biodiversity and cultural heritage. The expected outcomes of the program include a greater
understanding amongst communities of regulations on protected areas, involvement in
community-based Integrated Management Planning, and raised public awareness. Donor support
will be provided under:
a) AusAID: Agriculture and Fisheries Community Watershed Project
b) TFET: Second Agriculture Rehabilitation Project (Pilot Participatory Development
and NRMcomponent)
192
Table 12.17: Performance Information, Forest Protection and Forest Resources
Management
i
Performance Targets Measurement
No, of Watershed Management Plan Development Forestry Division monitoring records
proposals prepared
No, o f PNA boundary maps prepared I Forestry Division monitoring records
Program 3: Forest Production and Utilisation
12.52 The goal of this program i s to develop and promote the sustainable use of timber and
non-timber forest products in East Timor. It includes the undertaking of a forestry inventory on
key production areas, dissemination and discussion of a revised Forestry Policy and Strategy,
public hearings in support of draft directives on tree crops and non-timber forest products, and
enforcement of forest laws. The effective conservation of natural resources relies largely on
communities' wise use of those resources and their awareness and participation in resource
management. This program will rely heavily on public information and consultation.
Table 12.18: Performance Information, Forest Production and Utilisation
Performance Targets I Measurement
I
No. of directives and workshop proceedings Forestry Division monitoring records
reflecting issues and solutions proposed by the
communities
RESEARCH EXTENSION
AND CENTRE
12.53 The Research and Extension Centre i s a "service centre" to the technical Departments o f
the Ministry o f Agriculture and Fisheries and, consequently, no particular mission or problems,
goals and policies are laid out for the Centre as it i s structured to respond to the needs of the
other areas of MAF.
12.54 The goal of the Research and ExtensionCentre i s to provide support in the derivation and
dissemination of important technical, management and other information to clients of MAF
through its Departments. The Centre will combine the crucial functions of information and GIS
systems with a small laboratory for soil, plant and pest analyses. CFET funding will be allocated
to MAF staff inputs to the programs supported by the centre, operating costs for the equipment
held by the Geographic Information System (GIS) program, and a small amount of capital
expenditures for the purchase o f essential laboratory equipment and communications equipment
for the GIS program.
12.55 The Research and Extension Centre will have three essential programs:
Program 1. Research and Laboratory
Program 2. Information and Extension
193
Program 3. Geographic Information System (GIS)
Program 1:Research and Laboratory
12.56 The goal of this program i s to improve household and food security of farm families
through the provision of basic diagnostic laboratory services for soil quality, pests and diseases.
Technical advice for optimising crop yields through effective soil and fertiliser management and
protection of crops and livestock against pests and diseases are some of the services that are
often provided by the public sector. This program will reduce risks by facilitating quick
responses to inquires about soil quality, pests and diseases, along with location-specific fertiliser
recommendations.
Table 12.19: Performance Information,Researchand Laboratory
Performance Targets Measurement
Recommended fertilisation to improve soil nutrient Research and Extension Centre monitoring
limitations in problem soils & screening for records
adaptability o f crops in 3 agro-ecological sites,
plus a schedule of optimal plantingtimes
Data on soil physical and chemical characteristics Research and Extension Centre monitoring
analysed for a minimum of 50 farmers in 13 records
Districts
Insect pests problems identified and Research and Extension Centre monitoring
recommendations provided to 30% of farmer- records
clients
Weed species identified and proper control Research and Extension Centre monitoring
measures recommended records
Information materials on common pests and Research and Extension Centre monitoring
diseases produced records
Program 2: Information and Extension
12.57 The goal of this program is to provide essential agricultural information and transfer of
knowledge and skills to farmers. The program will help develop information programs
addressing specific needs of farmers (such as market and climatic conditions, timing o f
vaccination campaigns, technical advice), disseminated through appropriate channels, such as
radio, community centres, Churches, markets, pamphlets, and mobile audio-visual units. The
results of the recent poverty assessment indicated that access to better information i s associated
with higher income amongst farmers. In addition to information dissemination, this program
would help link MAF with international networks of the Consultative Group for International
Agriculture Research (CGIAR) through the internet. Ina country with isolated communities and
limited Government resources, establishing electronic linkages with international centres o f
excellence will become increasingly important. Such links would enable East Timorese staff, for
example, to contact international experts via the Internet to diagnose new plants or animal
diseases, or identify new crop varieties. Donor support for this program comprises:
a) TFET Second Agriculture RehabilitationProject
194
Table 12.20: PerformanceInformation,Informationand Extension
Performance Targets (for 5 years) Measurement
4 printed information documents on rice, 2 on maize, Research and Extension Centre
2 on root crops, 2 on beans; weekly 5-minute radio monitoring records
reports on improved farming practices.
Weekly agriculture radio program on agricultural Research and Extension Centre
projects and technology monitoring records
CGIAR linksestablished and operational Research and Extension Centre
monitoring records
Program 3: Geographic Information System
12.58 The goal of this program i s to support MAF in the planning and delivery o f geographic
information and highquality maps on current land use, land use potential, agriculturalproduction
and production trends, and socio-economic information, as a basis for natural resource
management and decision making. The GIS program aims to: (a) develop a cost recovery GIS
interpretation and mapping service for non-MAF users; (b) expand and provide assistance with
database development and mapping for land suitability based on available soils information; (c)
produce thematic maps o f land capability for agricultural expansion; (d) expand the GIS network
to other Ministry departments and integrate the individual units' databases; and (e) train staff in
database access, data entry, accessibility, desktop mapping, and evaluation of data reliability.
Donor support for this program comprises:
a) AusAID Agriculture/Forestry Landuse Mapping and GIS project
Table 12.21: PerformanceInformation,GeographicInformationSystem
PerformanceTargets Measurement
Train 3 MAF staff in database structure, data entry, GIS program monitoring records
accessibilitv. and evaluation of data reliabilitv I
Develop and institute a cost recovery system GIS program monitoring records
Expand and provide assistance with database and GIS program monitoring records
mapping for land suitability
Produce thematic maps o f land capability GIS program monitoring records
Integrate individual Departmental databases GIS program monitoring records
CADASTRAL UNIT
12.59 The Cadastral Unit i s responsible for: (a) maintaining the National Geodesian System,
cartographic projections, elevation data, support to hydrographic work and delineation of the
territory; (b) acquisition and processing of aerial photographs, analysis o f quality of national
cartography, certification o f professionals in the areas of topography and cartography, and
standardisation of maps; (c) maintaining the National BuildingRegister, including production of
identification cards for building registration, establishment of norms and technical specifications,
195
issuance of licenses, inspection of licensed buildings, and enforcement of regulations related to
building codes; (d) processing of geographic information, including satellite imagery, and
support to planning; and (e) maintenance of the national Global Position System stations,
including provision of topographic and geographic information to the general public.
12.60 The Cadastral Unit has one essential program: Geography and Cadastre
Program 1: Geography and Cadastre
12.61 The objectives of the Geography and Cadastre program are to maintain the National
Geodesic System, maintain cartographic coverage, implement the National Building, Rural and
Urban Cadastres, issue licenses, maintain geo-reference information, and generally cooperate
with other institutions to assist them in the areas of geodesic, cartography and cadastre services.
The Geography and Cadastre program proposes the following activities: (1) capacity building
and training; (2) developing an inventory of the previous geodetic points provided by Portugal
and Indonesia; (3) data collection; and (4) Sub-village administration survey.
Table 12.22: PerformanceInformation, Geographyand Cadastre
PerformanceTargets Measurement
Geography: maintenance, provide geodetic points a. Orde 0:6 geodetic points
throughout the country & finalise border b. Orde 1:25 geodetic points
demarcation between Indonesia & East Timor; c. Orde 250 geodetic points
Sub-village administration survey d. Orde 3:lOO geodetic points
Approx. 250 kmfor 6 districts: Lautem,
Baucau, Viqueque, Manatuto, Dili &
Cadastre: survey the land parcels in Dili for tax 2,500 land parcels in first step
andor certification
Mapping & GIs: produce basic topographic maps 250-500 maps at different scales (1:5000,
1:100000, 1:25000, etc.)
POLICYAND PLANNINGUNIT
12.62 The Policy and Planning Unit i s a planned new initiative of MAF. Because agricultural
development i s so critical to the development of East Timor and the well-being of the nation's
people, and because human and financial resources are scarce, MAF needs to be able to carefully
plan, implement and monitor those programs and projects for which it i s responsible. Skills in
areas such as benefit-cost analysis, used to prioritise projects, and in monitoring and evaluation
of budgets and projects will be amongst the required planning expertise.
Furthermore, policy development i s extremely important in the sector. Agriculture, fisheries and
forestry development all rely heavily on the development o f appropriate policies in a wide range
of areas such as fisheries management and licensing and user-pays requirements in the sub-
sector. The allocation o f the economic rents appropriated by commercial fishers is also an
important policy question to be addressed. In agriculture, policies in areas such as import duties,
196
irrigation water allocation, support for certain production activities, input subsidies and
marketing arrangements might be amongst key matters to be analysed.
12.64 It i s proposed that donor funding i s sought in 2002/03 for support of the Policy and
Planning Unit. The Unit would be staffed by an international advisor with appropriate expertise,
along with a small number of local staff from MAF who, after a period of 6-12 months, would be
expected to take over the running o f the Unit. The establishment of systems for tasks such as
monitoring and evaluation would be important activities in the start-up phase, as would the
training o f local staff in areas such as benefit-cost analysis.
PerformanceTargets Measurement
Establishment of appropriate systems for Systems established and runningwithin the
monitoring & evaluation and project appraisal first 6 months of the project
Training of local staff in monitoring & evaluation, Number of staff trained in each 12 month
benefit-cost analysis and project planning, period.
including use of appropriate software
Mapping & GIs: produce basic topographic maps 250-500 maps at different scales (1:5000,
1:100000, 1:25000, etc.)
197
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APPENDIX 12.1: OVERVIEW OF DONOR FUNDED PROJECTS IN THE
AGRICULTURE SECTOR
1. SecondAgriculture RehabilitationProject (ARP11)
The aims o f ARP 11, with funding o f $8.0 million from TFET and $0.9 million from CFET, are
to improve food security of rural families and increase agricultural production in selected areas
of East Timor. The implementation period i s December 2001 to December 2003. Estimated
expenditures in FY02/03 amount to $5.1 million. The project includes the following activities.
0 Pilot Participatory Development and Natural Resources Management in up to 30 pilot
communities in seven districts (Baucau, Covalima, Dili, Lautem, Liquica, Manufahi, and
Oecussi). This component will provide small grants to communities to strengthen their self-
reliance and the management of their natural resources. The sub-sector focuses are forestry
and fisheries, with other inter-sectoral inputs (crops and livestock).
0 Rapid Infrastructure Rehabilitation, including 2,100 ha of community irrigation schemes,
100 km of farm-to-market access roads, 1,430 ha of larger irrigation schemes, establishment
o f 11 Water User Associations, and a feasibility study for schemes that suffered major
damage. The sub-sectoral focus i s irrigation.
0 Services to Farmers, including the provision of information, programming and establishment
of a small CGIAR Liaison Secretariat at MAF, vaccination services for livestock, and
piloting of a system of private Village Livestock Workers (VLWs). This component also
includes the establishment and initial operation of up to six Agriculture Service Centres
(ASC), each of which would be privately run and owned by farmer associations, to facilitate
the marketing o f agricultural commodities and provision of inputs. The sub-sector focuses
are research and extension, livestock and crop production.
0 Program Management, including policy advice in the areas of general agricultural policy,
forestry strategy, fisheries baseline data, capacity building, minor equipment and vehicles for
district staff, and incremental operating costs and advisory services for a Project
Management Unit (PMU). The sub-sectoral focuses are crop production, fisheries, forestry
and general administration.
2. HeraPort RehabilitationProject (implementedthroughADB)
This project, with fundingof $1 million from TFET and $0.1million from CFET, will assist the
Government of East Timor to rehabilitate the Hera Fishing Port and put in place the necessary
infrastructure to attract private investment for its operations. The project will be implemented
through FY02/03, and i s focused in Dili. Estimated expenditures in FY02/03 are $800,000 and
the sub-sectoral focus i s fisheries.
205
1. Australian Centre for International Agricultural Research (ACIAR): Seeds for Life
Project
This project, valued at $266,000, is focused on: (a) evaluating the suitability of plant genetic
materials provided by the Consultative Group of International Agricultural Research Centres
(CGIAR) to East Timor conditions; (b) introducing modern cultivars to improve disease
tolerance, nutrient imbalance and climatic conditions; (c) improve farmers' access to high quality
seeds of modern cultivars; and (d) gather baseline data for future development programs on
increasing farm productivity. The project runs from November 2000 to October 2003 in Ainaro,
Bobonaro, Baucau, Aileu, Lautem, and Viqueque. The sub-sectoral focus i s crop production.
2. AusAID: EastTimor RuralDevelopment Program
This project, with a total cost of $9.5 million, has an aim of assisting East Timor's rural
development efforts in the districts of Bobonaro, Viqueque and Aileu. It consists of two major
phases, Phase I(January 2001 - December 2002) includes (a) project establishment; (b) rapid
impact projects in upland and lowland activities, supporting community-based activities (which
might include, for example, lowlandrice production, upland subsistence farming, small livestock
programs, chicken vaccination, and support to coffee production); and (c) three Technical
Resource Centres. During the second phase (January 2003-December 2005) the project will
support detailed design and implementation of longer-term Rural Development Projects. This i s
a multi-sector project.
3. AusAID: Fisheries ManagementPlanning
This project, at a cost of $907,500, aims to build the capacity of Fisheries staff to develop
policies and regulations associated with the management o f East Timor' s marine fisheries, and
assist MAF to design and implement a series o f fisheries management plans in cooperation with
coastal communities. The project runs from February 2002 to January 2005, and i s national in
scope. The sub-sectoral focus i s fisheries.
4. AusAID: Survey of NearshoreFish Stocks DiliHarbor
-
The principal aims of this small project ($7,700) are to assess the impact of current fishing levels
on the fish stocks of Dili Harbor and provide scientific skills transfer to the fisheries staff at
MAF.The project runs from April 2001 to August 2002, with a sub-sectoralfocus of fisheries.
5. AusAID: Agriculture and Forestry Landuse Mapping and GIS Development and
Training.
This $760,000 project has aims to: (a) strengthen landuse mapping and GIS information on soil
resources and classify agro-ecological zones; (b) develop zoning for organic coffee; (c) identify
of erosion-prone areas; (d) identify the layout o f major irrigation schemes and the condition of
access roads; and (e) provide landuse baseline data. The project runs from November 2000 to
November 2002, and i s national in scope. The sub-sectoral focus i s MAF's Research and
Extension Centre.
206
6. JICA: Study of IntegratedAgricultureDevelopmentinEast Timor
The aim o f this project, at a cost of $3.7 million, i s to formulate a mid-term comprehensive
development plan for agriculture, forestry and fisheries in East Timor. It includes an assessment
o f the present situation and problems, an inventory survey, and implementation of pilot
agricultural projects for human resources development (including integrated upland agricultural
management, and fisheries). The project runs from March 2001 to December 2002, and i s
national in focus. The sub-sectoral focuses are multi-sectoral and general administration inMAF.
7. JICA: Capacity BuildinginEast Timor, Japan and ASEAN Countries
This project (on a request basis) will provide technical assistance to MAFby providing Japanese
experts and training in East Timor, Japan and ASEAN countries. The timing and funding are
dependent on requests from MAF.
8. JICA: Rehabilitationand Strengtheningof Rice FarminginLautemand Manatutu
This project is focused on the distribution of seeds and tools to farmers, rehabilitation of
agricultural infrastructure, and capacity building for farmers' groups, at a cost o f $863,000. The
project runs from February 2000 to January 2003, and i s implemented in partnership with
CARE. The sub-sectoral focus i s crop production.
9. JICA: Recovery Program for Village Based Economic Activities in Los
PalosManufahi
This project, at a cost of $241,000, is focused on farmers' group organisation, comparative
studies, needs assessment, distribution of agricultural tools to, and assistance in commodity
production and marketing. The project runs from March 2001 to March 2004, and i s
implemented in partnership with Yayasan HAK.This i s a multi-sector project.
10. JICA: Agriculture DevelopmentProjectinBaucau
This project, at an initial cost of $330,000, is focused on technical assistance to farmers in rice
production, vegetable production and livestock breeding in Baucau. It also involves a survey
about further rural development assistance needs. This project i s nearing completion and has a
sub-sectoral focus of crop production and livestock.
11. Portugal: Replantingof Coffee and CoffeeResearch
This project is focused on coffee research and coffee processing, at a cost of $265,000. It
involves seed selection, experiments on coffee shading, trials on composting, experiments with
nursery construction techniques, integrated pest management, trials on planting techniques, and
nursery construction and plant distribution to communities. The project runs from November
2000 to 2003, and is operational in Ermera, Aileu, Ainaro and Same. The sub-sectoral focus is
crop production (industrial crops).
12. Portugal - Integrated Rehabilitation and Construction of Coffee Processing
Facilities
This project (approximately $220,000) focuses on rehabilitationof coffee processing, It involves
rehabilitation of water capture, storage and allocation facilities; construction or rehabilitation of
coffee processing facilities; coffee processing machinery supply; and demonstration and
maintenance of equipment. The project runs from April 2000 to 2003, and i s operational in
207
Ermera, Aileu, Same, and Liquica. Estimated expenditures in FY02/03 amount to $70,000.
Sub-sectoral focus: Crop Production (Industrial Crops).
17. Portugal: Reforestationand Alternative Cash Crops
This project, at a value of $310,000, has aims to set up nurseries for coffee shade trees, firewood,
timber (sandalwood, teak and others) and tree species for erosion control, and provide strategic
distribution o f seedlings to communities. The project runs from January 2002 to 2004, and i s
active in Ermera, Aileu and Liquica. The sub-sectoral focus i s forestry.
18. Portugal: Aquaculture
This $62,000 project has aims to do experiments on breeding different aquaculture species, and
to undertake comparative studies in traditional and modem facilities. It also aims to supply fish
fry to communities and, subsequently, evaluate the acceptance and possible further development
o f the project. The project runs from April 2001 to 2004/05, and i s active in Ermera and Aileu,
with a sub-sectoral focus of Fisheries.
19. Portugal: Capacity Building
This project, valued at $130,000, has aims to provide training on different techniques of nursery
construction for coffee, fruit trees, and forestry species, as well as aquaculture techniques. It also
includes capacity building for MAF, district staff, and associations and cooperatives of
farmers/experts. The project runs from April 2001 to 2004/05, and i s active in Ermera, Aileu,
Same, and Ainaro. The sub-sectoral focuses are administration and multi-sectoral.
20. Portugal:Interactionwith Other Institutions
This project, valued at $60,000, provides for interactions between East Timorese staff and
various institutions, such as CIFC (Centro de InvestigaqFio das Ferrugens do Cafeeiro.), ISA
(Instituto Superior de Agronomia), UTAD (Universidade de Tras dos Montes), INMG/UTAD
(Instituto Nacional de Meteorologia e Geofisica), UA (Universidade de Aveiro), UE
(Universidade de Evora), IHERA (Instituto de HidraulicaEngenharia Rural e Ambiente), Porbatt
(Portuguese Battalion), and ACIAR. The project runs from January 2002 to 2003/04 and i s
national in scope. The sub-sectoral focus i s administration.
21. USAID: NCBA Timor Economic Rehabilitation and DevelopmentProject
This $12 million project has provided support to coffee cooperatives inEast Timor since 1994. It
involves: (a) coordination of crop extension activities; (b) assessment of community welfare
needs; (c) finance; (d) processing facilities; (e) seedling nurseries; (f)demonstration plots; (g) a
vanilla seedling nursery; (h) community primary health care; (i) a Cooperative and Small
Enterprise Training Centre; and (j)a Consumer Goods Wholesale Cooperative run through small
enterprise village shops and kiosks. The project runs from 1994 to December 2002 and i s
operational in the districts of Ermera, Ainaro, Aileu, Manufahi and Liquica. The sub-sectoral
focus is crop production (industrial crops).
22. USAID: EconomicRecoveryProgram (Agriculture)
This program, valued at $900,000, is focused on the provision of materials and equipment to
farmers for various activities such as agro-processing inputs, rehabilitation of small-scale
irrigation schemes, industrial crops (e.g. Abaca), and fishpond rehabilitation. The project runs
from 2001 to 2003 with a multi-sectoral focus.
208
1. UNDPKJNOPS:Ainaro and ManatutuCommunity Activation Project
This $5.1 million project is focused on food security improvement, strengthening linkages to
agricultural services, and integrated watershed management. The project runs from December
2001 to 2005, and will be active in Ainaro and Manatutu. It i s a multi-sectoral project.
2. UNDPKJNOPS: Urgent Irrigation Rehabilitation Project I1 (funded by the
Governmentof Japan)
This proposed project, at a value of $5.8 million, will focus on the rehabilitation of irrigation
structures in Laclo and Manautu, along with training of members o f Water Users' Associations.
The sub-sectoral focus i s irrigation.
209
13. NATURALRESOURCESAND
ENVIRONMENT
"Real, lasting poverty reduction i s only possible if the environment i s able to
provide the services people depend on, and if natural resources are used ina
manner that does not undermine long-term development''
13.1 East Timor will manage and utilise its natural resources in a sustainable
manner that takes account of environmental needs in order to support economic
growth and improved community welfare.
13.2 The development and management of natural resources, including mineral
resources, and the environment i s the responsibility of the Department of Natural
and Mineral Resources (DNMR)and the Division of Environment (DOE),both of
which are agencies of the Ministry for Economic Affairs and Development. The
Ministry i s also responsible for Trade and Industry, Energy, Investment and
Tourism.
13.3 East Timor i s relatively poorly endowed with natural resources, apart from
the oil and gas reserves o f the Timor Sea. Anderson and Deutsch (eds., 2001) note
that oil and gas are amongst the few high value natural resources that can be
exploited for economic purposes, with the Timor Sea thought to be one of the
world's 20 richest oil deposits. Fisheries stocks are poorly understood, but might
also comprise an important economic resource.
13.4 Natural resources are limited in East Timor, and given that the nation
needs to make best use of its various resources, the sound management of those
resources i s a critical matter. Best use in this instance means that resources must
be used efficiently, thereby maximising the net benefits realised by the
community from such resource use. Sound management i s normally taken to
mean that resources are managed in a sustainable manner. The Conference on
Sustainable Development in East Timor (Anderson and Deutsch, eds., 2001, p. 8)
adopted the World Conservation and Environmental Development Conference's
definition of sustainability; viz:
"sustainable development is development that meets the needs of thepresent
without compromising the ability of future generations to meet their own
needs."
13.5 East Timor i s a mountainous country that i s less than ideal for agricultural
production. Its soils are derived from limestone and metamorphosed marine clays
and are, consequently, generally o f low fertility. The generally steep terrain,
shallow soils and heavy rainfall events during the wet season, render many parts of East Timor
very prone to erosion. Deforestation and grazing often adds to the problems of loss of topsoil.
Ongoing erosion causes sedimentation of rivers, reservoirs and near-shore marine areas.
13.6 Forest resources are widely usedby households for both timber and non-timber purposes,
and previously were also important in East Timor as export commodities. During the Portuguese
and Indonesian administrations export income was earned from the sale of species such as teak,
redwood, mahogany and sandalwood, all of which are native to East Timor. Apart from
sandalwood, timber products were mostly exported as unprocessed logs. Very little forest now
remains, and the vegetation consists largely of secondary forest, savanna and grassland. The
ecology of the flora and fauna of East Timor i s poorly understood.
13.7 Forests contribute to family livelihoods by providing firewood, non-timber products,
poles and timber. Firewood collection is, however, a major cause of deforestation. Effective
forest management has been achieved only in those few cases where the forest area has been
clearly defined and i s recognised by the community.
13.8 There was substantial damage to the forestry sector during the violence of 1999. Most
Government and private facilities were destroyed or stolen, while stockpiles of teak logs and
about 1,300 m3o f sandalwood for export were not allowed to leave. Large areas of mountain
forests where resistance groups sheltered were defoliated and now comprise degraded scrubland.
13.9 UNDP (2000) concluded that East Timor's marine ecosystem, if used in a sustainable
fashion, has considerable potential to support economic development and sustain the population,
thereby contributing to poverty reduction. Fisheries development i s currently guided by a
Strategic Plan formulated by the Department o f Fisheries and Marine Environment (FME).
13.10 Many species of animal in East Timor are threatened with extinction, particularly those
that rely on forests. A number of marine species are also thought to be under threat. The coastal
zone is, however, considered to be in very good condition. Mangrove ecosystems are
substantially intact and many beaches are fringed by coral reef. Reefs are a source of biodiversity
and are important for the ecological functions they provide. Plans exist to create both terrestrial
and marine protected areas in order to conserve biodiversity.
13.11 Pollution and the lack of waste management pose significant problems in the urban areas
of East Timor. Consequently, they also pose human health risks as well as a threat to marine
ecosystems and species in nearby marine areas. Dili has a very limited sewerage system and an
inadequate system for the collection and disposal of solid waste. Poor waste management has
resulted in the pollution of groundwater, which is the source o f drinking water for many o f the
people living in Dili. Litter i s a substantial problem, particularly in the urban areas, with plastic
and other materials usually being washed into the ocean during storms, where they represent a
hazard to marine species.
Poverty, Natural Resources and Environment
13.12 Consistent with the efforts to integrate environmental considerations into development
policies and programs, it i s now recognised that there i s an "urgent need to integrate
environmental concerns into poverty alleviation.. ." (World Bank Group, undated, p. v).
Furthermore:
211
provide the services people depend on, and if natural resources are used in a
"Real, lasting poverty reduction is only possible if the environment is able to
manner that does not undermine long-term development" (World Bank Group,
undated, p. v).
13.13 Consideration of the links between environmental interventions and poverty reduction in
East Timor should allow: (1) an improvement in people's health due to access to resources such
as potable water; (2) enhancement o f the livelihoods of poor people, particularly those in rural
areas where people depend on land, water, forests and biodiversity; and (3) reduction of people's
vulnerability to natural disasters such as violent storms, floods and fires.
I S
13.14 Two mission statements are reported here because the mission of the Department o f
Minerals and Natural Resources (DNMR) i s somewhat different to that of the Division of
Environment (DOE).
13.15 The mission of the DNMR i s to:
Efficiently administer legislation relating to minerals, energy and extractive industries in a
consistent, fair, transparent, timely and accurate fashion; and partner industry and provide
leadership in achieving regulatory reform.
13.16 The mission of the DOEi s to:
Conserve and protect natural resources and environment in East Timor through sustainable
development planning.
13.17 The goals for the mineral and natural resources and environment sectors are to:
efficiently manage minerals, energy and extractive activities in a consistent, fair,
environmentally appropriate, transparent and timely fashion;
protect and enhance the natural environment o f East Timor;
raise community awareness about the importance of protecting the environment
and behaving in ways that support such prote'ction;
work with other Government departments and agencies in integrating
environmental considerations into their policies, programs and projects; and
ensure accountability to the Government and community for financial,
environmental and safety aspects o f the extractive and energy industries.
212
13.18 The guiding principles for development in the minerals, natural resources and
environment sectors are as follows.
Sustainability
East Timor's resources will be used in such a way that they will still be available to future
generations, or at least provide benefits to those future generations of East Timorese (e.g. by
careful investment o f miningroyalties).
Efficiency
The nation will make the best possible use o f agricultural, water and other resources. They will
be used in such a way as to maximise the benefits from their use to all citizens ("allocative
efficiency"). It also means that the nation will not be wasteful with its resources - they will be
managed and used carefully ("productive efficiency") (Box 13.1).
Box 13.1: The Notion of Efficiency in Resource Use
The notion of economic efficiency is that a nation will manage and use its various resources in
such a way as to maximize the net social benefits to the whole of the nation from that use. This
implies that the `best' or optimal combination of outputs is produced by means of the most
efficient combination of inputs. Efficiency can be at odds with equity, because an improvement
in efficiency might make some people better off and some worse off. Policy-makers must deal
with such trade-offs.
Equity
Everyone will be treated equally or fairly. For example, people in rural areas should have the
same access to health, education and other services as people in urban areas, along with the same
opportunities to advance their living standards.
13.19 The key development indicators for each sub-sector are the following.
Department of Naturaland Mineral Resources
a) Establishment o f a database on mining, minerals, oil and gas resources.
b) Trained cadrC o f East Timorese to deliver all services to the sector.
c) Development, promulgation and implementation of legislation and regulations for
mining,oil and gas.
d) Survey and mapping of the minerals, oil and gas resource base in East Timor.
Division of Environment
a) More effective appraisal o f development proposals and consequent reduced
environmental impacts from development activities.
213
b) Development, promulgation and implementation of legislation and regulations on
environmental impact assessment and pollution control.
c) Increasedcapacity of DOEstaff to implement environmental regulations.
d) Completion of policies on important environmental matters, including water
catchment management, coastal zone management and biodiversity conservation.
13.20 The problems and constraints faced by both DNMR and DOEare, in general, the same.
Where either the Department or the Division face unique difficulties those are noted below.
Capacity
Both agencies face a lack of institutional and personnel capacity to undertake the wide range of
tasks with which they are confronted. DOEhas neither the number of staff, nor suitably skilled
staff, to meet its myriad o f important challenges. Similarly, DNMR has a very small staff
complement, although it i s planned to increase staff numbers considerably through the Plan
period. The DNMR also confronts the problem of a lack of appropriate staff skills.
Legaland RegulatoryFrameworks
The enabling legal and regulatory frameworks currently do not exist to support the
responsibilities o f both DNMR and DOE.The legal and regulatory legacy from the Indonesian
administration i s both irrelevant and ineffective. This also results in weak control of the
environmental impacts o f various development activities and, in the case of DOE,reduces its
effectiveness in establishing cooperative mechanisms with other agencies in relation to
environmental management.
Data and Information
Neither DNMR nor DOEhas access to relevant and accurate data on the inventory and state of
natural resources and the environment of East Timor. The lack o f such information constrains
their ability to ensure sustainable development and management of these resources.
FinancialResources
Both agencies face severe budgetary constraints for staffing, other recurrent costs and capital
equipment. Both require certain capital equipment to meet their responsibilities and, therefore,
they will rely on donor support in the medium term to establish both a stock of needed capital
equipment and a cadrC o f suitably trained staff.
Acknowledgmentand Independence
These constraints apply particularly to DOE.The existing institutional structure means that DOE
i s not a fully independent body, constraining its ability to make and implement decisions on the
appropriateness of particular development proposals. Concomitantly, there i s little or no
acknowledgment that DOEand its attendant environmental legislation (once developed and
implemented) should play a role as an independent umbrella agency that can regulate all
development activities, particularly those that carry environmentalrisks.
214
13.21 The key goals for DNMR and DOEto address the various problems identified are as
follows.
Department of Naturaland MineralResources
a) East Timor will be self-reliant in terms of institutional and staff capacity to manage
the sustainable exploitation o f natural and mineral resources and that such self-
reliance will be achieved by June, 2005.
b) Appropriate legislation and regulations will be developed, promulgated and
implemented by DNMR in support of the management of the nation's natural and
mineral resources.
c) The nation will develop the capability to appropriate the benefits of its natural and
mineral resource base through increased local value-adding and by ensuring that it
receives an appropriate share of the resource rents arising from exploitation of its
resources (see Box 13.2).
d) DNMR will develop a suitable database, inventory of resources and resource
mapping to support management of minerals, oil and gas and to develop
promotionalmaterialfor the sector. These materials will be in place by June, 2003.
e) The natural and mineral resources sector will be integrated into relevant regional
and global networks by the end of 2003.
Box 13.2: EconomicRent
Economic rent is the return earned on the use of natural resources over and above normal profit
levels. Often, this surplus is taken by a small number of users. Fisheries and oil and other minerals
provide many international examples of the rent being taken by the fishers and miners, with little
returned to the actual owners of the resource -the community. In East Timor, development of such
resources should be based on the principle that they belong to all citizens. Fishers, miners and
others should be allowed to make a fair profit, including a premium for risk, but returns over and
above these levels should come back to the people. This meansthat appropriate policies need to be
developed in relation to the use of natural resources.
Divisionof Environment
a) The evolution o f an environmental governance framework for East Timor that will
include:
sufficient institutional capacity in DOE and other relevant Government
agencies to protect and conserve the environment and biodiversity;
well researched, practical and effective environmental policies (laws,
regulations and guidelines);
effective cooperation and coordination across sectoral agencies through formal
and informal channels;
established processes such as State of the Environment reporting; and
215
0 ratification, where appropriate, of relevant international treaties and
conventions.
DOEwill facilitate increased awareness of environmental issues amongst the public
and Government agencies through publications, campaigns and environmental
curricula.
Air, water and soil pollution will be managed, particularly inurban areas.
The environmental impacts of existing developments will be better managed, while
an effective system for the environmental appraisal and review of investment
proposals will be implemented.
DOEwill establish a well-researched approach to biodiversity protection and
conservation, including the establishment of a system of protected areas for East
Timor.
13.22 Based on the problems and constraints and, subsequently, the goals of DNMR and DOE,
the following basic policies will be formulated.
Departmentof Naturaland MineralResources
a) Extensive institutional and capacity building programs in the period 2002-2006to
yield an appropriate institutional structure, including the establishment of a
separate Ministry of Minerals, Natural Resources and Energy, along with the
development o f a critical mass of local East Timorese staff with the requisite skills
to manage all activities in these sectors.
b) The Department will establish an enabling legal and regulatory framework based
on the nationalresource base.
c) DNMR will identify and join regional and global natural and mineral resources
networks, develop strategic alliances that facilitate the appropriate exploitation of
East Timor's mineral and natural resources, and promote the minerals, mining, oil
and gas resources of the nation to the world.
Divisionof Environment
DOE will emphasise capacity development initiatives to build specialist
environmental and other required skills amongst its staff, and support such capacity
development in other Government agencies.
Institutional strengthening of DOEwill be a focus of policy, with assistance from
bilateraland multilateral donors.
Appropriate regulatory and legal frameworks that support environmental
management will be developed, beginning with regulations on pollution control
and environmental assessment.
Considerable focus will be placed on strengthening cross-sectoral linkages to
improve the coordination o f environmental management and raise the profile of
DOEas the core Government agency with the charter for environmental assessment
and management.
e) Environmental awareness campaigns and efforts to raise public consciousness,
along with Government and private sector awareness of environmental matters,
will be a central plank of DOE'S policy framework.
13.23 Based on the foregoing information, the programs and projects summarised below will be
implementedin the period 2002/03 - 2007/08 to meet the needs o f each sector.
DEPARTMENTNATURALRESOURCESANDMINERALS
OF
13.24 The Department's development activities are driven by an overarching goal to plan,
design and implement an efficient, effective and economic mining, oil and gas sector
management and regulatory regime in East Timor. The following three programs will be
implementedby the DNMR.
Program 1: Institutional and Capacity Building
Program2: Enabling Legal and Regulatory Framework
Program3: Sectoral Development and Promotion
13.25 The projects to be implemented under each program, with the actual or proposed sources
o f funding and the current status of individual projects, are as shown in Table 13.6.
Program 1: Institutional and CapacityBuilding
13.26 This program i s based on a decision by Cabinet to establish the Department and vest in it
the task of "the management and regulatory functions for the natural resources and mining
sector." The institutional development aspects of this decision include budget provision, the
planning, design and establishment of DNMR,recruitment of staff, allocation of office space and
provision o f certain capital equipment in support o f its operations. The capacity building aspects
are focused on staff development, including:
a) assessment of the gaps in the skills available in both the public and the private
sectors;
b) public sector skills development and capacity enhancement through both in-house
and out-of-country training, along with hands-on `apprenticeships';
c) development of a central team of 20 East Timorese staff in critical skill areas
related to the development and management of the mining,oil and gas sector; and
d) support for private sector skills training for East Timorese, enabling them to benefit
from emerging employment opportunities related to mining, oil and gas sector
developments.
217
Table 13.1: PerformanceTargets, Institutionaland CapacityBuilding
Ferformance Targets IMeasurement I
Department of MNR fully operational Number of staff recruited and regulatory
framework in place
CadrC of 20 trained East Timorese staff Number o f suitably trained staff
r
Development o f needed skills in the Civil Service Numbers of training programs and
aualifications achieved bv local staff
Private sector skills training Establishment o f vocational and
technical level courses to support
emdovment in the sector.
Program 2: Enabling Legal and Regulatory Framework
13.27 Indonesian mining and gas laws, technically, remain effective in East Timor. In reality
they are, however, redundant as neither the organisational structure nor the sanctioning
authorities are in place to enforce those laws. This comprises a substantial constraint on
development in the sector, and one that discourages investors because of the uncertainty it
implies. Assistance i s needed to develop an appropriate legal and regulatory framework, with
UNDP and ESCAP committing to providing such assistance. Once a legal and regulatory
framework i s established, management systems and procedures will be developed and
implemented.
Performance Targets Measurement
Mining, oil and gas legal regime developed and Implementation of legal regime; number
implemented o f applications for exploration and
development licenses
Implementation of management systems and Number of training programs;
procedures management structure operational
Program 3: Sectoral Developmentand Promotion
13.28 Reliable information about mining, oil and gas resources in East Timor i s lacking.
Consequently, the main activities in this program relate to surveying, mapping and the
construction of an inventory o f the nation's minerals, oil and gas resources. A reliable resource
inventory is needed to: (1) allow the Government, through DNMR,to understand the likely stock
of resources and, therefore, be able to manage that stock in the best interests of the nation; and
(2) allow potential investors to plan and assess opportunities in East Timor. Furthermore, the
proposed remote sensing and GIS based survey and database development forms the main
buildingblock of the sectoral development and promotion strategy. Donor support will be sought
for this program.
218
Table 13.3: Performance Targets, Sectoral Development and Promotion
Performance Targets Measurement
Complete survey and mapping of mineral, oil Data available and accessible and
and gas resources in East Timor usable in support o f promotion
and sectoral development
DIVISIONOFENVIRONMENT
13.29 The overarching goal of DOEis to implement a National Environmental Management
Plan (NEMP) for East Timor, which is a necessary part of the Government's approach to
sustainable development. The implementation of the NEMP will play an important role in
poverty reduction through improved access to clean water and other resources, and also
contribute to economic growth in the long term because of improved management of the nation's
scarce natural resources. Under the NEMP development proposals will be screened for potential
impacts and advice given on the need for environmental management plans or environmental
impact assessment (EM). Effective laws and capable staff will ensure that such processes are
efficient and provide investors with high quality advice. While improving the investment
environment, it will also reduce the economic and social costs of environmental damage.
Environmental awareness and education for the community will support a cleaner environment
and have positive heath outcomes.
13.30 DOEwill focus on one overall program, viz:
Program 1: Environmental Governance Frameworkfor East Timor
The projects to be implemented under this program, with the actual or proposed sources of
funding and the current status of individual projects, are as shown in Table 13.5. The projects
and the principal elements in each project are as summarised in Table 13.4.
219
Table 13.4: ProjectActivities andOutcomes,Divisionof Environment
Project 1:Development & implementation of el vironmental legislation
EIA Regulations EnvironmentalProtection Act
Pollution control regulations EnvironmentalProtection Act
DOEcapacity to implementlegislation Capacity within Government & at District
Level
Relevant sectoral laws with environmental Capacity within Government & at District
safeguards Level
Project 2: Policy developmentfor catchments and coasts
I
Natural resources working group formally
established
Draft policy on catchments & coastal zone
management
Policy & draft law on biodiversity
conservation
Project 3: Development of National Environmental Policy
National Environmental Council
National Environmental Policy
National Environmental Action Plan
Program 1: Environmental Governance Framework for East Timor
13.32 The elements of the Environmental Governance Framework for East Timor Program are
summarised above. The performance targets for the program are shown in Table 13.5.
220
Table 13.5: PerformanceTargets, EnvironmentalGovernanceFramework for East
Timor
EL4regulations preparedand implemented by June Passing of regulations by Parliament;
application to development activities
Reduced pollution inDili and other urban areas Fewer cases of gross pollution. Pollution
licenses issuedfor major hotels &
polluting industries in Dili
Three DOEBulletins produced each year. Number of Bulletins, number of people
attending Environment Day celebrations
Celebration of World Environment Day in 2003
Increasedawareness of environmental issues
Natural Resources Working Group meets at least 4 Number of meetings, issues raised and
times per year acted upon
Initial draft policies produced and released for Development of draft environmental
discussion by June 2003 policies on pollution control and EIA.
Number of people consulted about policies
Capacity buildingof DOEstaff through training Number o f training programs and
programs in East Timor & overseas; at least one personnel receiving training; increase in
each of language training, technical skills training, technical skills
management training
Environmental capacity development at District Employment of consultant by November,
level 2002; recruitment of 4 District staff
members, number of workshops and
training programs
221
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14. INDUSTRY,TRADEAND THE PRIVATE
SECTOR
"Private sector investment and entrepreneurial activity, stimulated by
continued reconstruction activity and donor inputs inthe near-term, will be
the key driver of poverty reduction and economic growth in East Timor inthe
medium- to long-term."
14.1 To establish an East Timorese economy that i s stable and that enables a
society to bejust and prosperous.
14.2 As part of the national planning process, the Working Group for Industry,
Trade and the Private Sector reached a consensus on a sector Vision, as well as on
sector Goals, Guiding Principles and Key Development Indicators. These are
presented in Box 14.1. The agreed Vision, Goals and Guiding Principles then
formed the basis for preparation of the future work programs o f the five Divisions
within the MEAD. Details of the programs are set out below. Each division has
performance indicators related to programmatic activities and objectives. These
programs were agreed within the proposed Medium-Term Fiscal Framework that
covers the financial year 2002-2003 and the three subsequent financial years.
14.3 The foundations o f a market-based economy were implicitly set duringthe
UNTAET period and have since been confirmed in the articles of the recently
adopted Constitution. The Government has embarked on a model o f economic
growth led by private business, supported by an open approach to trade and
investment, and coupled with significant emphasis on human development and
good governance. Private sector investment and entrepreneurial activity,
stimulated by continued reconstruction activity and donor inputsin the near-term,
will be the key driver o f poverty reduction and economic growth in East Timor in
the medium- to long-term.
14.4 The transition period has witnessed a return to economic growth and a
rapid restoration o f much of the regular supply o f goods and services. The
economy will undergo further transformation during the life of the Plan. First, the
level o f international financial support and the size o f the international presence
will begin to reduce over the next few years, and the magnitude of reconstruction
programs will also decline, possibly causing negative rates o f economic growth in
2002-2003 and 2003-2004. Second, toward the end o f the life o f the Plan,
relatively large revenues from the oil and gas sector are expected to commence.
Both changes pose risks and opportunities to the economy and both have been
factored into the national planningprocess as fully as possible.
14.5 The successful transition to "economic independence" will continue to
require substantial support from international donors for private sector
development in the medium-term. In an economic sense, East Timor must build
from a very low base and the constraints on growth are many. But there are
certain opportunities that East Timor can pursue. Offshore oil and gas resources present the most
significant opportunity and, if well managed, will be the principal source of East Timor's
intergenerational wealth. Perhaps more important though will be the need to develop further the
non-oil and gas sectors of the economy, in particular agriculture and fisheries. This will be
important in terms o f reducing the level of poverty among the poorest, especially in rural areas,
and helping to avoid over-investment in industries producing non-tradable goods following the
start o f inward flows of oil and gas revenues. East Timor also has potential for sustained growth
intourism and among select forestry products.
14.6 More efficient and effective processing o f raw materials, natural resources, and in
particular agricultural produce, will subsequently enhance domestic development as well as
contribute to export revenues. With better transport, communications infrastructure and better-
educated workers, East Timor over time will become more attractive to investors.
14.7 The principal task of East Timor's economic policy-makers, however, i s to develop the
best possible enabling environment in which private sector business activity can succeed.
Accordingly, this i s the central thrust of the programmatic initiatives set out in the Plan.
Continued development of the business regulatory environment, reinforced through effective
promotional activities, i s the comerstone of the sector's plan. This will place a demand upon the
resources o f those parts of Govemment responsible for preparing and passing legislation and
subordinate legal instruments. Several parts of the regulatory framework have been readied to
varying stages, for example the foreign investment law. However, other areas such as legislation
addressing land reform and uncertain property title have not yet been effectively addressed.
Overall, there are three broad areas of intended program activity within the sector:
a) Policy and regulatory development related to the private sector-enabling
environment.
b) Govemment and joint public-private promotion o f industry, investment, tourism
and trade.
c) Capacity buildingof civil servants and private sector operators.
14.8 The largest portion of East Timor's private sector is its micro-enterprises and SMEs, and
the needs o f these businesses dominate the policy-making horizon. As the formal enabling
framework takes greater form, and as private sector activity deepens and the average size and
capacity o f businesses grows, a key challenge will be to take advantage of downstream
opportunities that may follow from the offshore oil and gas operations. This includes seeking to
build the capacity of smaller businesses, developing better domestic and foreign supply chains,
and broadening the economic base, thus generating more employment, utilizing more advanced
technology, and increasing non-oil and gas exports. This will be the principal task of greatest
relevance to economic policy-makers in the years to come and will continue well beyond the life
of the Plan.
14.9 Trade, both foreign and domestic, will play a crucial role in achieving this growth and
development. East Timor should actively develop its trading industries, especially those with an
export focus, and seek to increase trade with its neighboring countries, mainly Indonesia and
Australia, where proximity to markets and logistics provide realistic opportunities. East Timor
should seek membership of appropriate trade groupings and seek preferential treatment from key
export markets. East Timor's foreign trade regime needs to be carefully set. It needs to be open,
and it needs to reflect the fact that East Timor shares land and sea borders with Indonesia and
these borders will become increasingly porous. Import tariffs set too highly in such an
225
environment will tend to encourage inward smuggling and loss of customs revenue. While
imports can bring technologies and products essential to growth and development, imports can
also destabilize the economy, fuel higher prices, and polarize employment opportunities in the
near term, Therefore, it i s imperative that growth in trade and foreign investment does not
disenfranchise the population and cause incidental costs to the environment and society.
Similarly, domestic trade will play an important part in continuing to restore the supply of goods
and services, especially to outlying rural areas. This has already occurred to some extent, mainly
enabled by a relatively rapid replacement of the national truck and bus fleet since 1999.
14.10 Development of East Timor's agricultural base and its rural areas will be an important
part of economic growth and poverty reduction strategies. New manufacturing capacity will be
targeted in rural areas where rural non-farm employment opportunities can be generated.
Processing of raw materials and agricultural products to add value to outputs will enhance
domestic development as well as contribute to export revenues and reduce poverty.
14.11 In buildingthe enabling environment, the following are the main issues that East Timor
will needto address:
a) minimize barriers to domestic and foreign investments
b) provide more certain land and property rights, especially for enterprise
development
c) improve availability of, and access to, credit for micro-enterprises and SMEs
d) expedite enactment of key laws
e) ensure that enhancement of the policy and regulatory framework i s matched by
corresponding capacity of the legal system to adjudicate
f) increase level and diversity o f exports, and improve domestic productive capacity
g) maintain sufficient flexibility and competitiveness in the national wage structure
h) soundly invest proceeds from offshore oil and gas extraction
14.12 The Working Group and the MEAD undertook an extensive amount o f analysis of policy
and strategy options which formed the basis o f decisions on the programs and projects presented
here. This process of analysis was, in itself, an important outcome of the national planning
process. The Working Group and the MEAD also recognize that the formulation of the Plan i s
the beginning rather than the end of the planning process. Beyond the scope of this document,
the MEAD will establish action plans that will be used to guide the ongoing activities required
within the programs and projects. The MEAD i s also aware o f the importance of monitoring and
evaluating progress against performance indicators as they are set out in the Plan and will
institute appropriate monitoring and evaluation systems.
14.13 The national planning process has shown a large number of outstanding requirements that
would benefit from additional external assistance. Within this sector, there are high-priority
programs and projects that will be essential to achieve economic growth and to reduce poverty
that may funded by donors. These include, for example, projects to develop the regulatory
framework, micro-enterprise and SME development, trade and foreign investment policy and
law development, and capacity building.
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14.14 In conclusion, it i s certain that a vibrant private sector will be the key determinant of
whether East Timor can achieve sustainable growth leading to improved livelihoods. However,
in the near term and during the critical transition period, little can be achieved in development
without the continued assistance of international donors and it i s intended that this document will
help guide donor deliberations on future interventions in this sector.
Box 14.1 Vision, Goals, GuidingPrinciplesand Key DevelopmentIndicators,Issues
and Constraints
An East Timorese economy that is stable, and that enables a society to be just and
prosperous.
tioals:
1, To increase the level of per capita income
2. To improve the ability to compete with the rest of the world
3. To create new employment
4. To eradicate poverty
5. To create a healthy capital investment environment
6. To develop export-oriented industries
7. To raise the inflow of international tourists
8. To promote the sale o f local products overseas
9. To strengthen the banking system to enable a strong economy
10:To provide infrastructure to help, inparticular, agri-business develop
11,To broaden community access to commercial credit
tiuiaingrrincipiesror rrogramueveiopmenr:
1. That nationalwelfare is equitable
2. That provides full employment opportunities
3. That reduces income inequalities
4. That optimizes benefit from natural resources
227
Key Development Indicatorsfor the Five-year Plan:
1. Income per capita to reach $600per annum (in2002 dollars)
2. Percentage of non-coffee exports to reach 60% of total non-oil and gas exports
3. Value of non-oil and gas exports to grow ten-fold from 2001 export levels
4. Ratio of ImportdGDP to fall from 170%to c 70%
5. Number of foreign investment operations to reach 2,000
6. Total foreign tourists to reach 5,000 per annum
7. Industrial production/GDP to reach 15%
Issues and Constraints
The Working Group identified the following as some o f the issues, risks and constraints facing
the sector and to which the Plan seeks to respond:
1. Lack of literacy inthe country.
2. Highpopulationgrowth rate that will place pressure on labor market.
3. L o w levels of technology and productivity in all sectors.
4. Unclear incentives for business people.
5. Limited government budget to fund programmedactivities.
6. Low levels of productionefficiency, notably inagricultural.
7. Coming reduction in international presence and resultingdemand distortions.
8. Minimal experience in and understanding o f sovereignty.
9. Lack of civil servant policy-makingexperience.
10. Uncertain property and land rights.
11.Incompletelegislative framework invirtually every essential commercial area.
12. Continuing lack of physical capital, plant and equipment.
13. Relatively high wage rates relative to probable international competitors.
14. Uncertainty about areas of nationalcomparative advantage.
15. Small domestic market for absorption of domestic goods and services.
16. hsufficient access to, and levels of, credit for small business
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17. Inability of lenders to take collateral against loans.
18. Limiteddomestic experience with entrepreneurship and business.
19. Undeveloped business services sector for enterprise support.
20. No inward/outward passenger/tourist ships from Indonesia.
21, Lack of supporting systems and infrastructure to develop tourism.
22. Underdeveloped infrastructure, especially telecommunications and energy.
23. Adverse implications of inappropriately protective trade and investment policy.
24. Lack of functional banking and financial intermediation.
25. Adverse domestic welfare transfers from poorly conceived economic policy.
26. Persistence of extreme negative Current Account.
27. Higher import barriers that will adversely affect poverty reduction efforts and stifle
economic development.
28. Non-nationaltreatment accorded to foreign businesses will occur if care i s not taken to
ensure enabling investment legislation and adjudication under a rule of law.
29. Future expectations of higher taxes by business as public expenditures rise.
30. Non-repayment of loans leading to restrictions on credit extension will reduce
willingness of banks to increase lending.
31, Non-compliance of domestic businesses for payment o f tax and utilities will continue
to threaten both infrastructure and commercial development.
32. Import-dependency without growth in domestic production will lead to unsustainable
trade deficits.
33. Dependence on oil and gas royalties will result in failure to develop other industries
will lead to a distorted and narrowly based economy.
34. Higher trade tariffs may lead to corruption at border areas, or increase smuggling, anc
will threaten confidence in governance.
35. Appreciating/strong US dollar relative to currency of key export markets will result ir
macroeconomic and monetary imbalances.
36. Insufficient inclusion o f women in private sector development activities.
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14.15 The ODG provides the overall departmental leadership and administrative coordination
of activities of the four Divisions. The Director-General will have primary responsibility for
departmental capacity building, staff training, budget management, and coordination of
complementary Division activities. The ODG will also support promotional activities, coordinate
multi-media requirements, and implement a realistic monitoring and evaluation system to
implement and guide the sector's efforts against the programs and projects set out in the Plan.
14.16 The ODG will become the primary repository for materials and skills that are necessary
for economic development, capacity building, and support for departmental projects. The ODG
will also be responsible for training, inter-departmental communications, and joint projects with
other agencies o f Government. Donor-related activities specific to programs or projects under the
MEADwill be coordinated through the ODG, includingactivities for micro-enterprise and SME
development, tourism, domestic and foreign investment, industry development, foreign and
domestic trade, and business registration.
14.17 It i s important to distinguish between activities within the budgeted framework of the
MEAD (and the programmatic divisions) and those projects that will require external budget
support or direct donor assistance. The ODG i s responsible for managing all of the programs and
projects of the sector. This includes government-funded activities that can normally be classified
as capacity building, promotional, and policy and regulatory development. Such responsibilities
will also require coordination with other departments, in particular, in relation to drafting
legislation and regulations, and with external donors and NGOs.
14.18 The ODG will also be responsible for managing and leading extemally funded programs
and projects which are identified within the Plan but will be beyond the scope of the national
budget to implement. The ODG will support various donor and NGO initiatives by helping to
design and implement projects, and providing access to Government support as necessary.
Similarly, the ODG will work with donors, civil society and NGOs, to ensure that the benefits of
external inputs are maximized and well distributed, and that duplication i s avoided.
14.19 The ODG will also be responsible for leading efforts to engage with foreign partners,
both investors and governments, in an effort to grow the economy. This will include fostering
stronger foreign trade links, explaining the potential of East Timor to foreign investors, and
ensuring that benefits from such efforts are demonstrably connected to economic growth and
poverty reduction throughout the country. In order to achieve this, the Government intends to
work closely with the private sector and civil society to explain the expected benefits of
economic development efforts and how those benefits should be available to all, but in particular
to the poorest.
PROGRAMS OF THE ODG
Key Objectives:
a) To generate new employment and create economic opportunities
b) To ensure coordination with other Government departments on private sector
development
230
To assist and stimulate effective relationships with foreign countries and foreign
investors
To pursue legal and regulatory initiatives that enable a competitive private sector
To encourage private sector development that can drive future economic growth in
East Timor
To coordinate policy and regulatory development for all parts of the private sector
To provide the departmental support for division promotions and effective public
relations
To achieve sustained improvements in departmental capabilities for economic
development
Key Strategies:
a) Understanding the specific requirements of private sector businesses
b) Coordinatingthe wide range o f necessary policy and regulatory development work
c) Maximizingthe value of, and coordinating, donor contributions to the sector
d) Coordinatingthe promotional work of Divisions and achieving efficiencies
e) Leading efforts to find solutions to business problems such as uncertain land title
rights
f) Strengthening institutional economic policy-making, administrative and promotional
capacity
g) Sequencing implementation of sector programs and projects according to set priorities
Program 1: Coordination of Divisional Promotions
a) Divisional promotions
b) External assistance for promotions
Program 2: Coordination of Policy and Regulatory Development
a) Policy bank
b) External technical assistance coordination
c) Regulatory Development Coordination
d) Enterprise land reform
e) International arrangements
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Program 3: Institutional Capacity Building
a) Institutional strengthening with donor assistance
b) Seminars and workshops
14.20 The ODG represents the departmental leadership and focus for administrative
coordination and has the following primary objectives:
To pursue, in coordination with other relevant departments, the development of a full
commercial code including, primarily, laws on insurance, incorporation,
unincorporated business entities, contract, trademarks and bankruptcy.
To develop with the MoJ a company registration and licensing system.
To institute a Land Code including a land registry which will facilitate more certain
land and property rights and enable more protection for capital improvements to land
for both foreign and domestic investors.
To support the passage o f laws that will better enable the operations of banks and
micro-finance providers to increase their levels of lending, and their ability to
mobilize savings.
To establish an overarching micro-enterprise and SME development program, and
coordinate donor intervention for training, business services, access to credit, and
build stronger domestic trade linkages that better support flow of goods and services
between Dili and the districts.
To promote the importance o f the private sector through public media, and to
demonstrate the benefits o f a market-based economy, and to coordinate divisional
printingof publications.
To build institutional capacity within the department for and establish a sustainable
professional development program.
To promote the principle of National Treatment for all investors and enterprises, thus
equal treatment under the law.
To support the development of capable business associations and chambers of
commerce to address private sector issues.
ED
14.21 In order to achieve its objectives, the ODG will support the strategic initiatives of other
departments and government agencies. It will provide departmental leadership in implementing
the programs and projects of the Plan. It will take the lead in establishing and following an
agreed format for monitoring and evaluating its own efforts and that o f other departments in
implementing the programs and projects of this sector. The ODG will seek to regularly explain
the nature o f the sector plans to other departments and the private sector so that all stakeholders
are informed about the efforts of Government to grow the economy and reduce poverty. The
ODG will also necessarily respond to changing circumstances, as well as ensuring that the Plan
i s regularly updated in accordance with broader Government planning processes. This integrated
sector strategy will be realized through coordinated division strategies that achieve economic
growth through effective legal and regulatory initiatives, enhanced training, pursuit of a strong
domestic economy that concurrently supports export development, and a diversified economic
base that supports new employment while reducing poverty.
Program 1: Coordination of Divisional Promotions
14.22 The ODG has the capacity to pursue objectives related to general public relations, but
more importantly, to support promotional activities for each of the programmatic divisions.
These may include inter-divisional projects for private enterprise development, joint industrial
and investment initiatives, SME development, and interdependent trade development projects.
Essentially, the ODG will provide a focal point for information, publication, and material
database development relevant to industry, investment, trade, and tourism.
14.23 The projects to be implemented under this program are the following.
a) Public Relations on Private Enterprise Development
b) Association and Chamber Development and Support
c) Divisional promotions
d) Internet and Web-based systems development
e) Departmental Printing and Publications
Program 2: Coordination of Policy and Regulatory Development
14.24 Many objectives of economic development of high priority to the Department and the
private sector rely on inter-ministerial cooperation for legislation. Consequently, the ODG will
develop a liaison procedure with each relevant ministry or agency, outlining the type of
legislation required for economic development and the rationale to underpin a policy for
legislative initiatives. The ODG will then identify projects or activities under the program that
can be managed through appropriate divisions within the department or through cooperative
governmental efforts. In many instances, these will require donor assistance that the ODG will
either directly pursue or identify as projects to be presented to the C o M and donor organizations.
14.25 The projects to be implemented under this program are the following.
a) Regulatory Development Coordination
b) Policy Bank
c) External Technical Assistance Coordination
d) Enactment o f a Foreign Investment Law
e) IntellectualProperty Rights, Patents, Trademarks, Copyrights
f) Consumer Protection Laws and Related Safety, Truth in Advertising
233
Enterprise Land Reform and Titling
Public Land Reform and Titling
Rural and Agricultural Law Reform and Titling
Land Title and Registration System
Internationalarrangements
Land Lease and Use RightsProject
Program 3: Institutional Capacity Building.
14.26 There are several priority objectives requiring capacity for training and requisite expertise
for human resource development. The training will require external expertise and donor-
supported technical assistance for general training processes and for specific educational
activities. The ODG will identify component activities under this program, the target
participants, and the expected results within the five-year planning horizon. Eventually, the
objective will be to have internal training and development capacity with effective educational
materials and resources to sustain staff initiatives in economic and private sector development.
As an additional benefit, these capabilities will allow the department to be a provider for
materials and access to training in economic and private sector affairs for other offices and
agencies.
14.27 The projects to be implemented under this program are the following.
a) Departmental Staff Capacity Training
b) Development of Human Resource Training for Business & Economics
c) Skills Training and Entrepreneurship (relates to Informal Sector Initiatives)
d) SME Training Support and Modeling
e) Institutional Strengthening with Donor Assistance
234
AT
Objectives PerformanceIndicators
1. Generate new employment and create Number of new jobs
economic opportunities
0 Percent reduction inunemployment
0 Increased per capita GDP
2. Ensure coordination with other 0 New commerciallaws enacted
Government departments on private sector
development 0 New regulatory regimes initiated
0 Numberof appropriate inter-ministry and
cross-divisional projects initiated
3. Buildrelationships with foreign countries 0 Trade legations or foreign offices initiated
and foreign investors inregion, globally
0 Number o f foreign investor inquiries
Number o f foreign investors with East
Timor registrations
Resolution of trade or currency treaties and
other international issues
4. Build an efficient and competitiveprivate Percent increase in private sector
sector enabling environment contributionto GDP
0 Percent increase in private sector jobs
Number of newly registered private
commercialenterprises
5. Enable the private sector to drive future Progress on sustainable infrastructure for
economic growth in East Timor private enterprise growth
0 Resolution of utility and power issues
Effectivetax regime to encourage domestic
and export growth
6. Coordinate policy and regulatory Fully completed commercial code
development for all parts of the private
sector 0 Implementationo f foreign investment law
Effective insurance and banking laws
Land reform and titling program instituted
14.28 A large work program has been set out for the Do1 to address both economic
development within the industrial sector and to make an important contribution to poverty
reduction. The Do1 has conducted useful baseline studies. It will continue to conduct industry
235
assessments while exploring new opportunities that may be attractive to investors. The results
will allow the Do1to orchestrate a meaningful industry promotion program and directly pursue
innovative ways in which the country can encourage a stronger platform o f private sector
initiatives that can be sustained.
14.29 The challenges for industry, which are essentially concerned with manufacturing and
processing systems, are enormous after nearly 70 percent o f the industrial base was destroyed.
Despite this, it i s encouraging that so much potential remains if manufacturing can be
reconstructed as a foundation for future growth.
14.30 In 1997, there were approximately 46 different types of manufacturing in five industrial
sectors (rice and coffee processing, wood furniture and crafts, textiles and weaving, construction,
and baking). Manufacturing also existed in iron works, dyeing, salt production, and a number of
very small micro-enterprise cottage activities. At that time, 4,494 enterprises were formally
registered, employing about 13,355 workers, and generating an official output of more than $20
million in income on $65 million invested. Today, some manufacturing remains in most sectors,
but at such low levels and with such marginal resources that it is difficult to classify any activity
as self-sustaining.
14.31 A Do1study completed in 2001 indicated that there are around 1,300 enterprises engaged
in some means of manufacturing or processing. This could be an optimistic estimate as many
sampled enterprises were informal cottage activities in rural areas. Estimated total employment
among these may not be more than 8,700 workers, and little i s known about the investment base
or income generation. Consequently, plans for the Do1rest strongly on the ability to establish a
reliable picture of manufacturing, of employment, investment, and industries with growth
potential.
14.32 The Do1 cannot, on its own accord, implement a feasible strategy for growth in
manufacturing or national industry development. Success will depend greatly on integrated
activities within the MEAD, and the interdependent activities o f this and other government
ministries. In most instances, division objectives, strategies, and project activities represent
operational planning, project oversight, and coordination, not direct use o f departmental budget
and staff.
14.33 The Do1 will focus primarily on small-scale enterprises, and further emphasize
opportunities in agri-business, but also be part o f the integrated departmental activities conducive
to trade and tourism. The division has formulated objectives as benchmarks for the five-year
planning period, and it has devised strategies based on the themes of integrated activities and the
interdependencies among government constituents. A composite overview o f division plans i s
presented in Box 12.3 and these components are further described in subsequent sections.
PROGRAMSOFTHE DO1
Objectives:
a) To create greater employment opportunities in the industrial sector
b) To provide a better enabling environment for private sector investment
c) To produce more added-value products inEast Timor, especially in agriculture
236
d) To increase export earnings through usingmore technology inproduction
e) To ensure increases in export of non-oil and gas related products relative to GDP
f) To increase Government tax receipts via a profitable formal private sector
g) To ensure that Government policy does not hinder micro-enterprises and SMEs
Strategies:
a) Developing a stronger business culture and support to SMEs
b) Promoting private participation in infrastructure development
c) Devoting resources to export promotion and diversification of the export base
d) Increasing commitment of resources to development of basic business skills
e) Strengthening the policy and regulatory environment
f) Facilitating creation of industrial infrastructure such as the Industrial Zone
g) Working toward greater access to bank credit for small businesses
h) Encouraging improved competitiveness, efficiency and productivity
i) Improving the economic policy-making capacity of Division staff
Program 1:Industrial Development
Key Projects:
a) Industrial Zone assessment and development
b) Business Development Centres and subordinate Business Offices
c) Formation of Chamber of Commerce and development of business associations
d) Industry database enhancement
Program 2: Policy and Regulatory Development
Key Projects:
Small EnterprisesProject I1business regulatory environment development
Support for inter-agency development o f Policy Framework for Micro-financing and Credit
Development and maintenance of relevant industrial and commercialpolicies
Program 3: Divisional Training and Development
Key Projects:
a) SEP I1civil servant economic policy-making skills training
237
b) Training in industrialdevelopment experiences
c) Training in service delivery to the private sector
Program 4: Micro-enterprise and SME Development
Key Projects:
a) Small EnterprisesProject (SEP I)
b) Small Enterprises Project (SEP 11)
c) Micro-finance Development Project
d) Formation of Inter-industry Commissionon the Micro-enterprise and SME sector
e) Establishment of industrial skills and crafts centre and exhibition centre
14.34 The following are some of the objectives of the DoI:
a) To create greater employment opportunities in the industrial sector and support
growth initiatives in other sectors.
b) To ensure that Government policy does not hinder growth of microenterprises and
SMEs and supports efforts to builddomestic trade.
c) To work with other departmental activities to promote a favourable investment
climate and to mobilize investment capital in the private sector.
d) To promote development in the manufacturing, processing, and industrial enterprises,
specifically in relation to agro-businesses.
e) To assist the private sector in creating greater value-added production that can
stimulate strong domestic growth and accelerate employment.
f) To increase the number of established registered manufacturing enterprises.
g) To increase industrial output relative to overall GDP.
h) To increase the tax revenue base, over time, through the formalization of new
enterprise and employment activities, and by demonstrating the benefits of
participation inthe formal economy
i) To increase export earnings through usingmore technology inproduction
14.35 In order to achieve its objectives, the Do1 will follow an integrated, multi-sectoral
approach with strategic programs and focused projects during the next five years. The core
strategies require working jointly with other ministries to improve the physical and institutional
238
structures conductive to the promotion and development of industry, trade, investment and
tourism with responsible utilization of natural resources.
14.36 The divisions programs will be implemented through a strategy of targeted development
of industrial infrastructure, such as industrial estates, that can provide as a priority, strong
domestic manufacturing and process capabilities. This will require a parallel strategy aimed at
financial needs of the industrial community encouraging new credit and investment, greater
access to bank credits, and donor-assisted activities that can improve credit access and financial
intermediationto industrialenterprises.
14.37 A crucial strategic role of the Do1 will be to identify opportunities and assist SME
development that reaches small, cottage, and entrepreneurial activities. The most forward-
looking strategy will be concerned with competitiveness, which reaches well beyond industrial
reconstruction or early transitional activities to include East Timor's position within the region
and among more global interests for participating in bilateral trade agreements, establishing
industry delegations, and pursuingprojects that can achieve realistic competitive advantages.
14.38 The division will pursue several programs to implement its strategies with each defined
according to logical categories of activities. Each program will initiate projects and identify
activities that can be initiated under the division or through joint-divisional efforts, and in each
programmatic area the division will identify potential donor-assisted projects and activities.
Many of these have overlapping responsibilities within the department, but also with other
governmental ministries.
Program 1:Industry Promotion
14.39 Internal to this program will be a concerted effort to support and promote export
development, bilateral trade with primary trading partners, broad-based investment, and tourism.
The Do1 will have responsibilities in all areas, but more specifically in coordinated projects
inclusive of manufacturing, agro-business, and vendor-related activities that support initiatives
such as hospitality development. Industry promotion will occur, in part, through the BDCs and
regional offices, and through support for CoC and private sector business associations. It is also
essential to build into the departmental system an integrated industry database that can be
utilized in trade, investment, and domestic industrial development promotions.
14.40 The projects to be implemented under this program are the following.
Development of National Industrial Association and Chamber of Commerce
Formation of Inter-industry Commission on Cottage and Micro-enterprises
Assessments on Industry and Database Development
Establishment o f IndustrialSkills and Crafts Training Centre
East Timor Handicrafts and Industrial Products Showroom
Industrial Zone assessment and development
BDCs
239
Program 2: Policy and Regulatory Development.
14.41 This program area.captures the leading role of the division of industry for legal and
regulatory initiatives specific to manufacturing and industry sector growth. A critical part of this
program i s coordination of the Small Enterprises Project I1 with respect to the component
activities designed for regulatory development that will be orchestrated with a specific (and
separate) program of SME development described momentarily. Much of the division's work
will bejointly pursued under the ODG and with cross-divisional support.
14.42 The projects to be implemented under this program are the following.
a)
I Regulatory Requirements for IndustrialAnd Economic Zones
b) Inter-AgencyDevelopment of Policy Framework For Micro-Finance And Credit
c) SEP I1Business Regulatory Environment Development
d) Establishment of a Government Credit Guarantee Agency for Industry
e) Capital Markets and Industrial Investment Initiative
Program 3: Divisional Training and Development
14.43 The Do1 has a commensurate responsibility to develop staff capabilities to plan and
manage industrial projects, or to coordinate inter-divisional activities. Not least of all, staff must
be able to work closely with many different ministries and a variety of donors who will be
essential to success in East Timor's drive toward a market-based economy. Consequently, the
division will provide industrial databases, materials, information resources, and programmatic
models for training and management development. It will work together with other divisions to
design intervention proposals to support department-wide efforts at comprehensive staff and
management development. Several project activities are listedbelow:
14.44 The projects to be implemented under this program are the following.
a) Division Capacity Building and Training in Industrial Development
b) SEP I1as Related to Civil Service Economic Policy Making and Skills Training
c) Joint Training for Services and Industrial Vendor Support Systems in the Private
Sector
Program 4: Micro-enterprise and SME Development.
14.45 A majority of projects and activities under a micro-enterprise and SME mandate will
address issues within the informal economy. This will occur consciously as part of the division
strategy to assist entrepreneurs, cottage enterprises, and established SMEs who can become
taxpayers while benefiting from official support and public services. Projects under this program
will provide assistance to micro-enterprises, but also support new ventures, independent
entrepreneurs, and SMEs with growth potential through training and business services. In
addition, the division will work closely with trade and tourism, and with other sectors such as
agriculture, forestry, and fishing, to target interdependent problems of access to bank credit, and
micro-finance. Many o f these initiatives will necessarily require donor support and technical
assistance, particularly for enhanced skills and technology development.
240
14.46 The projects to be implemented under this program are the following.
a) SME Development Initiative for the Private Sector
b) Formation of Inter-Industry Commission to pursue legitimization and registration of
micro-enterprises and SMEs
c) Joint project with divisions on BDCs and business advisory services
d) Business Skills Training for the Private Sector (SEP Iand 11)
e) SME I1market rehabilitation project
f ) Micro-finance Development Project and lending promotion activity
g) Project on competitionpolicy, and competitiveness
h) Business Information and Entrepreneurship
I Objectives PerformanceIndicators
1. Create greater employment 0 Number of new jobs in manufacturingand related
opportunities in the industrial sector industrial enterprises
and other businesses Percent decrease in unemployment
Percent increase in per capital GDP
2. Provide a better enabling Number o f newly registered private companies
environment for private sector
investment 0 Implementation of commercial code and related
regulations
3. Produce more added-value products Number of new products fabricated in industry and agro-
inEast Timor, especially in business
agriculture New processes introduced in conversion systems and
Industry
Perception of higher quality products and services
4. Increase export earnings through Increased capital asset base
usingmore technology in
production Number of companies with exportable goods
Number of companies with new production technologies
Percent increase in value-added exDorts
5. Ensure increases in export of non- Percent increase of exports of non-oil and gas related
oil and gas related products relative production
to GDP
0 Number of new external trade linkages
241
I 6. Increase Government tax receipts I 0 Increased taxes from registered business enterprises I
via profitable formal private sector
businesses 0 Number of new registered private sector enterprises
0 Percentage increase o f taxes from exports and
domestically marketed products
7. Ensure that Government policy 0 SME rate of growth matches or exceeds industry and
does not hinder growth of SMEs sector performance
and the informal sector
0 Percentage of SME capital assets matches or exceeds
industry averages
0 Percent o f commercial credit available
NOFINVESTM
14.47 The mandate of the DIi s to encourage and facilitate new investment, in particular foreign
investment. This will require establishment of an enabling environment for foreign and domestic
investments and pursuit of capital projects that can improve the nation's technological profile
and provide greater employment opportunities. Inward flows of foreign capital, especially as the
size of the international presence continues to decline, will be critical to economic growth and
poverty reduction. The DI will take the lead on seeking to improve the regulatory and policy
framework for foreign investors, promoting foreign and domestic investment, and building the
capacity of its staff to carry out their tasks effectively. The DI will work closely with other
divisions such that new investment can be attracted to areas that best support the targeted
objectives o f the overall sector, including industry, trade and tourism.
14.48 The DI cannot achieve these overarching objectives independent of efforts from other
parts of Govemment. The only feasible way to succeed on these issues as a nation is through
integrated activities and a cooperative, interdependent commitment among the ministries and key
agencies as well as with the private sector and civil society. With that in mind, the DI has
formulated objectives for the five-year planning period, and it has devised strategies to
implement programs o f investment and development within an interdependent system of
activities.
14.49 The DI has, during the UNTAET period, already developed a reasonable approach to
managing and attracting foreign investment, based on informal, but broadly understood,
Government policies. These policies, given that the country was in a transition period, served
the country well and have enabled a surprisingly high level of foreign investment. The coming
period will require these quasi-regulatory arrangements to be formalized.
14.50 Further, the policies and practices emerging from the DI will have a strong signaling
effect to the private sector. The Government recognizes this and i s committed to maintaining an
open and transparent role in approving, registering and licensing foreign investment in an
efficient and even-handed way. To give this approach a legal footing, the DI has formulated a
draft policy and regulation governing FDI. These underscore the Govemment's commitment to
seeking additional FDI and to providing a high level o f service to investors. The DIhas a large
work program set out within the Plan but it attaches especially high priority to putting in place a
formal policy and regulation governing FDI.
242
14.51 The focus on coordination with other divisions and departments i s intended to ensure that
the benefits of FDI are maximized. This relates to, for example, the desire to increase
appropriate investment in the tourism sector, as well as coordinating with the DOEto ensure that
the Government's commitment to environmental protection is upheld. Additionally, the
Government is keen to attract long-term, high quality FDI, especially where it brings new
technology, i s labor-intensive, promotes exports or increases domestic productive capacity, and
creates new demand for inputs from local suppliers.
PROGRAMSOF THE DI
Objectives:
a) To maintain an open and responsible foreign investment framework
b) To attract foreign investment that creates employment and bringsnew technology
c) To help link foreign investment with domestic businesses, especially for supply
d) To create a "One-Stop Shop" for foreign investors to help streamline the investment
process
e) To attract foreign investment that generates new, sustainable export industries
f) To encourage foreign investment that adds value to agricultural products
g) To demonstrate to all stakeholders the merit of foreign investment to the country
Strategies:
Working with other Divisions to build a strong policy and regulatory environment
Initiating and overseeing the passing o f a foreign investment law
Supporting broader Government efforts to redress land and property title uncertainty
Maintaining oversight of the activities and initiatives of foreign investors
Improving the technical capacity of Division staff over time
Promoting East Timor as an attractive investment destination
Usingforms of promotional advertising such as brochures and exhibitions
Advising potential investors of the risks and opportunities available in various sectors
Consulting regularly with domestic businesses about the impact of FDI
Preventing crowding out of domestic businesses
243
Program 1:Investment Promotion
Key Projects:
a) Investment Service Centre (One-Stop Shop)
b) Production of PromotionalLiterature
c) Overseas and domestic foreign investment promotion events
d) Website project
Program 2: Policy and Regulatory Development
Key Projects:
a) Development, maintenance and enforcement of policy and legislation
b) Support to development and oversight of licensing requirements
Program 3: Divisional Training and Development
Key Projects:
a) Overseas training in language and service delivery
b) Technical training in foreign investment management
Program 4: Foreign Investment Management
Key Projects:
a) Foreign investment database
b) Foreign investment reporting and review mechanism
c) Certification o f foreign investment
14.52 Below are some of the key objectives of the DI:
a) To draft and implement a Foreign Investment Law capable of sustaining long-term
interest in foreign investment while enfranchising and complementing domestic
investments and satisfying social and environmental parameters.
b) To work with the MoJ to facilitate a foreign company registration and licensing
system.
c ) To cooperate with appropriate ministries to develop a Land Code with a land registry
which sets out ownership rights and provides certainty for investors to add capital
improvements to land.
244
Create feasible scenarios for FDIand domestic development for cultural centres, eco-
tourism, and recreational facilities.
Establish feasibility studies for capital-intensive enterprises (resorts, fisheries, LPG
gas depots, and others) that can be marketed to foreign investors.
Within the DI, create an Investment Service Centre (one-stop shop) that can process
investment inquiries and applications for foreign investment certificates and
complement Division of Trade activities.
To establish programs and services that promote investment opportunities in regional
tourism, thus reinforcing a positive global image for East Timor as an attractive
foreign investment opportunity.
To ingrain the principle of National Treatment for all foreign investors and
enterprises, thus ensuring equal treatment under the law.
To work jointly with the Divisions of Industry and Trade to establish special
economic zones for controlled export and transshipment of value-added, processed
goods.
Establish a sustainable professional development program on foreign investment and
its related activities for internal departmental staff, and that can be used for external
staff and private sector development through seminars and workshops.
14.53 The DIendorses the concept of an open approach to foreign investment, and the division
will follow an integrated process for strategic implementation of all objectives. Even those with
primary responsibilities resting within the division, extensive cooperation with other divisions
will be required to achieve the desired outcomes. The division will pursue a comprehensive
strategy of generating greater legal capacity for investment with effective processing and
management of registered foreign investments. This will include monitoring and evaluation to
protect the environment, and joint strategies for planning with trade and tourism to promote
ecologically sound investments. Investment strategies include a systematic effort to design
project proposals that can be considered by government or by donor organizations. These will be
targeted investment initiatives that will result in sustainable expansion of infrastructure or a
policy framework that can encourage accelerated foreign investments. Understandably, a
strategy of encouraging labor-intensive industries will have more direct effect on employment
and poverty reduction than large capital-intensive projects, yet the division will evaluate the
strategic impact o f any initiative that foster growth while not threatening to crowd out local
business.
14.54 The primary strategies described above imply orchestrated programs to serve as vehicles
for achieving divisional objectives. These are described individually with projects proposed that
can be reasonably addressed within the five-year plan, even though many will rely on interactive
development with other divisions. Significant donor assistance will be crucial as resources and
technical expertise in many project areas i s beyond local capabilities in the near term.
245
Program 1:Investment Promotion.
14.55 The division will specifically address innovative approaches to domestic and foreign
investments, incentive systems, feasibility plans for unusual projects, joint investment-trade
activities, public information and foreign investor information systems, and various types of
assistance that can be offered through governmental hospitality and investment centres. These
may include domestic and foreign media activity, VIP centres and support at airports and
seaports, advisory services for foreign investors, conferences on trade and investment, and
seminars and workshops on investment
14.56 The projectsto be implementedunder this program are the following.
East Timor IndustrialProducts and Trade Exposition Centre (joint with others)
Create investment liaison activities with Tourism to support promotions o f a NTB
Investment Service Centre (One-Stop Shop)
Investment promotion project for regional trading partners (mainly through Trade
liaisons inAustralia and Indonesia)
Investment promotion project to include East Timor in trade and investment
databases among major foreign trade regimes (e.g., Japan, Hong Kong, others)
Production o f Promotional Literature
Website for intemational investment and trade activities
Promotional development of materials and marketing of East Timor's investment
opportunities
Informationand promotion project with activities for investor packages, and project
activities for interfacing with public media, providing seminars, and promoting
investment-oriented conferences
Program 2: Policy and Regulatory Development
14.57 Inconcert with the ODG, the DI will support legislative and regulatory initiatives related
to economic growth, and it will take a leading role in laws and regulations concerning foreign
and domestic investments. Closely related to legislative issues are those activities of processing
and registering foreign investments, and subsequently monitoring investor activities for
compliance.
14.58 The projects to be implementedunder this program are the following.
a) Draft and pursue enactment of a Foreign Investment Law
b) Joint development o f a Foreign InvestorRegistry System with the MoJ
c) Implementation o f an internal processing system for Applications and Certifications
of Foreign Investors
d) Interdependentcoordination of a Customs and Trade Regime
246
e) Support to development and oversight of licensing requirements
Program 3: Training and Development
14.59 The division will pursue specific staff training and investment development activities that
systematically improve departmental capabilities for promotion, coordination, and management
of foreign investments. These activities will also be structured to strongly support all domestic
development and complement programs and projects under the divisions o f industry, trade, and
tourism.
14.60 The projects to be implemented under this program are the following.
a) Establish capacity building activities for foreign language materials and overseas
investment communications.
b) Technical training and assistance for promotion of foreign investments
c) Technical training and intervention support for foreign investment processing and
management systems
Program 4: Foreign Investment Management
14.61 The key to managing foreign investment activities will be to provide a "one-stop-shop"
focus within the division. This will not be a specific centre in itself, but a comprehensive
approach to foreign investments whereby an investor can obtain information on opportunities,
make applications, process requests for registering companies, and process requirements for
licenses or permits. At the same time, the division can expedite applications and rapidly route
information for reviews and approvals, and subsequently position the investor for efficient
registration. Management also includes projects that expand investment capacity, and that ensure
monitoring and responsible compliance procedures. Planning will be required with inter-
ministerialcooperation on many projects under the program.
14.62 The projects to be implementedunder this program are the following.
Foreign Investment Database
Foreign Investment Certification
Feasibility studies for investor scenarios in resorts, hospitality, culture, and recreation
opportunities
Feasibility studies for major foreign investments (e.g., LPG terminal, port
transshipment system, air cargo, and fisheries.)
Investment coordination with Divisions of Trade and Industry for capitalization o f
industrialzones
Joint projects with government agencies for seaport and airport development
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Objectives PerformanceIndicators
~~
1. Maintain an open and responsible D Absence of protective regulations and equitable
foreign investment framework treatment under the law for all enterprises
b Number of investment inquiriesby foreign
investors
D Favorable trade and customs regimes
comparable to regionaltrade partners
2. Attract foreign investment that B Number of new investors
generates employment and introduces
new technology D Increasedvalue of FDIrelative to GDP
3. Help link foreign investment with East B Number of joint ventures or invested
Timorese businesses, especially for cooperatives with foreign and domestic
supply enterprises
Number of foreign investment applications and
number of joint venture or subcontracted
business registrations
0 Percent DarticiDationbv East Timorese
4. Create a "One-Stop Shop" for foreign 0 Effective application and registration system in
investors to help streamline the place
investment process
0 Progressive number of registrations processed in
a timely manner
5. Attract foreign investment that 0 Number of foreign investors engaged in export
generates new and sustainable export of commodities
industries
0 Survival rate of foreign invested companies
6. Encourage foreign investment that 0 Rate o f increase inagriculturalproduction
adds value to agriculturalproducts
0 Number of agribusiness enterprises with foreign
invested new processes/technology
0 Value of agriculturalproducts
0 Improved logistics or markets
7. Demonstrate to all stakeholders the 0 Number of public information releases or media
merit o f foreign investment to the events on foreign investment
country
0 Number of participants in sponsored events,
seminars, and conferences
0 Proportional participationin events by private
entemrises
248
14.63 The tourism sector has been identified as having great potential in East Timor, although
care must be exercised in its development in order to protect the natural environment, and to
avoid the mistakes made in tourism development in other countries. Prior to 1975, East Timor
was attracting around 3000 tourists per year. There i s scope within the life o f this Plan to attract
numbers well beyond that. Indeed, and in the absence of reliable statistics, there i s some
indication that quite a large number of tourists (perhaps 1,000 per annum) have already arrived
in East Timor duringthe UNTAETperiod. Evidence suggests that the majority of these tourists
have been friends and family o f international personnel working in East Timor.
14.64 The DT has already undertaken a large amount of preparatory policy development and
baseline studies. There i s scope, however, for further policy development work and for the
Government to better inform the private sector about prospects for tourism in East Timor and
specific investment opportunities. The Plan calls for the DT to carry out additional promotional
work and better advertise the many attractive features available to tourists.
14.65 Investment by private businesses will be the key driver of growth in this sector, although
the role of Government in promoting tourism and assisting private sector operators i s crucial.
The relevant Key Development Indicator refers to a consistent growth in the number of tourists
attracted to East Timor, yet a critical result will also be sustained growth in foreign investment
within the sector. Tourism i s a relatively labor-intensive sector, and so tourism i s to be promoted
with a view to generating new direct and indirect jobs. Investment in tourism, and tourist
spending, will drive demand for a range of goods and services including in construction,
transportation, and supplies such as linens, foodstuffs, clothing and handicrafts.
14.66 A key objective o f the DT i s to raise the national image of East Timor to being an
attractive destination for both investors and tourists. The broader private sector-enabling
framework will be instrumental in achieving this. Inline with other divisions, the DT recognizes
the need to develop a commercial code as well as improved infrastructure. Although the DT i s
not directly responsible for infrastructure, it will help coordinate regarding the necessary
infrastructure improvements, for example, water and sanitation, telephone connections, and
environmental protection requirements. The DT will have an active role in coordinating with the
Divisions of Trade and Investment on overseas and domestic promotional activities.
14.67 The DT also proposes to ensure that civil society understands the Governments tourism
policy and how tourism i s expected to help drive economic growth and reduce poverty. The DT,
as part of its sector development, also intends to demonstrate the potentialbenefits for protecting
cultural and historical heritage that can occur as a result o f properly regulated tourism
development.
PROGRAMS THEDT
OF
Objectives:
a) To build a tourism industry in East Timor that generates employment and maintains
culture
b) To attract and maintain foreign investment in the tourism sector and capture foreign
skills
249
c) To identify and promote strategic tourism sites and experiences inEast Timor
d) To create a profile of East Timor abroad as an attractive tourism destination
e) To support the development of necessary supporting tourism infrastructure
f ) To establish a specialized centre of training in tourism and hospitality
g) To develop cross-sectoral appreciation of the benefits of tourism
Strategies:
Developing a repository of professional personnel with specialized tourism skills
Improving welcome and farewell facilities at the airport
Capturing a greater amount of data on what tourists are seeking in East Timor
Establishing a separate governmental body to oversee tourism development
Adopting an agreed tourism policy that sets out a tourism development framework
Usinginternational forums to promote tourism investment opportunities
Maintaining an ongoing promotional agenda via print media and the Intemet
Conserving natural and cultural capital that will underpin East Timor's tourism
appeal
Ensuringthat tourism is developed at arate acceptable to the community
Requiring skilltransfers from foreign operators to domestic operators
Program 1: TourismPromotion
Key Projects:
a) Multimedia materials production and distribution
b) Website project
c) Tourism database
d) Visitor and tourist reception and information centres
Program 2: Policy and Regulatory Development
Key Projects:
a) Tourism policy framework
b) Strategic planning for industry development
250
Program 3: Divisional Training and Development
Key Projects:
a) Tourism and hospitality training centre
b) Overseas capacity buildingtraining for divisional staff
c) Seminars and workshops
14.68 Following are some of the objectives of the DT:
To create a NTB to promote East Timor within the Southeast Asia region, and to
establish a positive global image for East Timor through foreign travel and tourism
channels, government agencies, and commercialinvestment interests.
To establish an advocacy and advisory role to assist government with constructive
reforms and progressive, sustainable development.
To establish airport and seaport arrival facilities for business travelers and tourists in
concert with related infrastructure improvements.
To sustain a professional development program for hospitality and services.
To identify and insulate strategic locations for resort or coastal development, thereby
protecting the environment from haphazard development, but also providing a long-
term planning scenario for hospitality and tourism investment.
To establish sanitation standards and waste management regulations for all licensed
public facilities, thus supporting a proactive image for business travel and tourism.
To establish a performing arts centre with student enticements for cultural events,
thus anchoring East Timor's cultural history while providing tourist-related interests
inthe nation andthe region.
To foster documentation of traditional recipes and encourage culinary art through
formal schools and materials, and enhance the quality o f all food and beverage
services through skills training, workshops, and a repository of multi-ethnic and
regional information.
To create an Internet Website promoting tourism in East Timor
Establish a Hospitality Training Institute for hotel, restaurant, and tourism services to
solidify skill levels and a labor market within the sector.
14.69 The DT will pursue a primary strategy of creating a diversified tourist industry,
effectively using natural coastlines, interior elevations, and recreational benefits o f sea-and-
island environment. Development will be planned within a framework of ecological preservation
251
and cultural enhancement, promoting growth through a skilled workforce with quality facilities
and services.
14.70 A promotional strategy will be implemented through a focal program to establish an
image for East Timor that attracts tourists and business investors. Promotional activities will be
targeted to trading partners in close proximity to the country, and subsequently to selected
countries where East Timor can be strongly marketed.
14.71 The division also has a commitment to train and develop staff within the division and to
provide broader training services to other government agencies or to private sector constituents
with an interest intourism, travel, and hospitality services.
Program 1: Tourism Promotion.
14.72 The DT will pursue all cost-effective and realistic opportunities to promote travel and
recreation activities in East Timor through print and electronic media, Web services, projects of
cultural and eco-tourism, and recreational advantages of the natural coastline, interior, and sea.
Promotions will also extend to materials and projects designed for marketing through trade
missions, commercialforeign travel agencies, and foreign travel network associations. A number
of projects and activities under the program will be concerned with value-enhancing and image-
building priorities, such as welcome centres at airports and seaports for business and casual
travelers, hosting seminars and meetings on tourism, and creating investor packages for external
promotions.
14.73 The projects to be implemented under this program are the following.
Develop a Web Site for broad-basedInternet promotions
Establish multi-media materials, pamphlets, and public relations activities
Create packaged investor feasibility studies for foreign investment in tourism and
recreational activities
Create a database on tourism sites, investments and attractions
Visitor and tourist reception centres
Publication and dissemination o f travel and tourism information through trade and
foreign country liaisons
Program 2: Policy and Regulatory Development
14.74 Responsibility for this program will include initiatives by the division for planning
coastline and inland sites that can be ecologically safe and attractive to foreign investors. Other
objectives will involve establishing a NTB, coordinating regulations that relate to hospitality and
travel services, working with airport and seaport authorities, and coordinating (or structuring
proposals for) projects such as the creation o f a cultural centre or a hospitality training program.
Many other projects may be pursued with donor assistance, and the division itself will have
operational responsibilities, such as working with the Investment Centre to approval foreign
investments in tourism.
252
14.75 The projects to be implemented under this program are the following.
a) Creation of the NTB and operational constituency
b) Legal and Regulatory reforms affecting hospitality, travel, and tourism
c) Tourism Policy Framework
d) Joint project with airports on planning, tourism support, travel facilities
e) Joint project with seaports on planning, tourism support, travel facilities
f ) Strategic planning for resort development and coastline or interior site development
g) Cooperative projects with public works on sanitation and waste management
standards for public licensed establishments
Program 3: Divisional Training and Development
14.76 The DT will develop internal staff training materials, hold workshops, and support short
courses on travel, tourism, and hospitality management to hone divisional capabilities. In
addition, the division will develop training modules that can be used in other government offices,
or used in conjunction with promotional activities for private sector development. There are
several projects under this program while most responsibilities are within operational activities.
14.77 The projects to be implemented under this program are the following.
Develop training materials, seminars and workshops on tourism, hospitality
management, and travel
Overseas capacity building training for divisional staff
Establish regular staff training and periodic reviews, seminars, and workshops with
technical assistance (donor related) on Tourism, planning, and sector regulatory
priorities
Establish a culture and performing arts centre
Establish a hospitality training institute centre
Contribute materials workshops, and information to the departmental database and
utilize the database for outreach seminars and intergovernmental staff development
253
Objectives Performance Indicators
1. Builda tourism industry D Number employed in tourism, hotels, hospitality, and related
inEast Timor that services
generates employment
and maintains culture B Number of new tourism enterprises
B Percentage increase in contribution by sector to GDP
B Number of Tourists arriving
B Average stay and expenditure of tourists
2. Attract and maintain D Increased level of foreign investment in tourism industry
foreign investment in the
tourism sector and capture B Number of foreign-invested service enterprises in tourism
foreign skills B Number of applications for foreign investment in tourism-
related enterprises
Increased tax base from foreign investors within tourism
sector
_______~
3. Identify and promote 0 Number o f approved sites and finished plans for tourism
strategic tourism sites and development activities
experiences inEast Timor
0 Number of foreign investor links to site plans and
developments
0 Level of investment in tourism site development
4. Create a profile of East 0 Results from surveys and assessment as to image by tourists
Timor abroad as an of East Timor
attractive tourism
destination 0 Feedback reports from foreign travelers or agents on
marketing and promotion o f East Timor
5. Support the development 0 Number of facilities, hotels, or sites that meet set standards
of necessary supporting
tourism infrastructure 0 Number of sites and percent of total that have facilities
comparable to those in other regional countries
0 Number of SMEs and handicraft firms able to market to
tourists
0 Increase in tourist days/year
6. Establish a specialized 0 Number of students enrolled
centre o f training in
tourism and hospitality 0 Percent increase in applications
0 Percent of graduates employed
7. Develop cross-sectoral 0 Level of participationin tourism events, seminars, workshops
appreciation of the
benefits o f tourism 0 Public image of tourism services
254
14.78 Trade, both foreign and domestic, will play an important role in growing the economy
and reducing poverty. Maintaining an open foreign trade policy, and resisting protectionist
tendencies to increase import tariffs, will be critically important in ongoing efforts to increase
nationalcompetitiveness, grow consumer spending surplus, and respond accurately to production
constraints, especially in agriculture. A stronger external sector has been repeatedly identified as
an essential precursor to a stronger economy. The Government's currency policy will also have
a strong effect on the economy in general and trade in particular. The US dollar, should it retain
its current relative value, or appreciate relative to key trading partners, will make East Timor's
exports less competitive and make imports more affordable.
14.79 The Govemment intends, upon independence, to seek membership of appropriate trade
organizations. In relation to this, the Division of Trade will work closely with the Ministry of
Foreign Affairs and Cooperation. Preferential treatment from key export markets, should it be
obtainable, will immensely help East Timor's export competitiveness as it continues its transition
to a viable, independent economy. The Government's key trading partners will be Australia and
Indonesia. Accordingly, additional effort to maximize benefit from bilateral relations with these
countries should help East Timor to increase market access and levels of exports. As East Timor
further formalizes its foreign trade policy over the next few years after independence, it will be
important to recognize the shared and porous land and sea borders with Indonesia and the
prospect of inward smugglingand loss o f customs revenues should import tariffs be set too high.
14.80 The Government is also determined to reduce the size of the trade deficit and so has built
into the Plan specific programs and projects designed to enhance domestic production capacity.
This is aimed at increasing the level and diversity of exports and enabling local businesses to
compete with foreign businesses in the production of regularly imported gods, for example,
foodstuffs.
14.81 Improving domestic trade linkages will arguably be the key factor in reducing poverty in
rural areas, and in reducing income disparities between rural and urban areas. Improvements to
domestic trade linkages will require a cross-sectoral approach, and will focus heavily on
improving information flows and services, and buildingbusiness support services. Programs and
projects have been adopted in other sectors to improve rural access to telecommunications, and
to continue to maintain the state of the roads. Additional training to rural businesses i s also
planned.
14.82 The Division of Trade, working with the DoI, will play a role in monitoring levels and
types o f businesses, both big and small, domestic and foreign. The Business Registration Unit
(BRU) will carry out much of this work. The Plan calls for enhanced efforts in business
registration, both so that the process provides more utility to business users and serves as a more
helpful database for Government. It i s possible that the BRUmay move to the MoJ as part of the
future Office o f Companies Registrar, to be established pursuant to the law on corporations. The
BRU, nevertheless, is includedhere as a separate program.
255
PROGRAMS OF THE DIVISIONOF TRADE
Objectives:
a) To increase the level and diversity of exports
b) To maintain an open and competitive foreign trade regime
c) To explain the benefits of resisting protective tariffs
d) To seek membership of appropriate regional and international trade groups
e) To reduce the trade deficit
f) To improve the information systems of the Business Registration Unit
g) To add value to export products using new technology spillovers from FDI
Strategies:
a) Promoting East Timor's products overseas at trade fairs and via other means
b) Encouraging foreign and domestic businesses to develop an export orientation
c) Supporting business associations develop overseas linksthat will enhance trade
d) Pursuingan amendment to exempt income tax on exports (excluding gas and oil)
e) Enabling domestic trade to link into foreign trade, especially for exports
f) Developing domestic production of imported goods, especially foodstuffs
g) Improving information monitoring systems for the Business Registration Unit
h) Seeking preferential trade arrangements from key exports markets as appropriate
Program I: Trade Promotion
Key Projects:
a) Trade Exposition Centre
b) Trade fair Participation
c) Multimedia materials production and distribution
d) Domestic trade promotion and domestic market linkages
e) Overseas foreign trade promotion
256
Program 2: Policy and Regulatory Development
K e y Projects:
a) Intemationaltrade agreement accession
b) Trade and customs law
c) Foreigntrade policy
d) Domestic trade policy
Program 3: Divisional TrainingDevelopment
K e y Projects:
a) Overseas capacity building training for divisional staff
b) Seminars and workshops
c) Language and trade management training
d) Program 4: Business Registration Unit
K e y Projects:
a) Business registration and updating
b) Information systems
c) Monitoring and evaluation
14.83 Some of the objectives specified for the Division i s as follows.
To establish a Trade Exposition Centre for trade and investment development.
To create regional trade promotion activities that reach throughout the country with
relevant initiatives and support.
To encourage innovative development processes and technologies that add value to
products or that introduce new products capable of reaching export markets.
To establish trade legations with close trading partner nations.
To establish trade-oriented relationships with regional multi-lateral associations,
including ASEAN, the Pacific Forum, and others according to East Timor's capacity.
To build domestic trade linkages by promoting better information services that are
more accessible to small business people
To establish, in conjunction with the Divisions of hdustry and Investment, an
industrial zone for controlled export and transshipment of value-added products.
257
h) To establish a Web Site for trade information and market opportunities that captures
both export profiles and import requirements essential for domestic development.
i) To establish staff training and management development activities to enhance trade
regulatory and management capabilities within the division and among other relevant
government agencies.
14.84 The Division of Trade will pursue an aggressive strategy of integrated domestic
development on which to foster exports and concurrently attract investments that can sustain
future trade growth. The key to effective trade i s having the domestic strength in exportable
products that, in East Timor' s situation, will require a broad-based development program of
industry, tourism, agriculture, and infrastructure. The Division of Trade cannot directly pursue
initiatives in any of these circumstances, but it can provide the support of government trade
programs and a policy environment conducive to trade and investment.
14.85 The division will directly assert its capabilities in trade promotion to reach foreign trade
conduits for investment and market opportunities. This will be an information-based strategy of
utilizing the departmental database on all industrial and economic activity to formulate market-
penetrating marketing materials and web-based access to East Timor' s trade opportunities.
14.86 The division will pursue a human resource development strategy aimed at elevating the
division's capabilities for working in, regulating, and managing a trade regime. In addition, this
effort will establish materials and skill-based resources for wider utilization within government,
for joint private-sector training and promotion activities, and for future development planning
systems.
RADE PROGRAMSAND PROJECTS
-
Program 1: Trade Promotion
14.87 The Division of Trade will pursue joint projects within a broad program o f development
with airport and seaport authorities to expand foreign trade, export processing, warehousing, and
logistics. In addition, the division will be working closely with divisions o f Industry and
Investment on initiatives concerning special economic zones and industrial parks. The ultimate
objective of this program is to rapidly enhance the capability of East Timor to development
exportable products and to pursue export markets.
14.88 The projects to be implementedunder this program are the following.
a) Establish the Trade Exposition Centre in conjunction with divisions o f industry and
investment
b) Coordinated activities with divisions of Industry and Investment for capitalization of
industrial zones
c) Joint projects with government agencies for seaport and airport development to
facilitate trade logistical capabilities
d) Support and promotion o f export-related industry for inclusion in industrial parks
258
Domestic trade promotion and domestic market linkages
Technical assistance for SME training and enterprise development of trade-related
marketing, promotion, and financing,
Export finance and development for expediting international transactions
Export and Trade participation, such as regional presence in trade shows, hosting
trade and exporthnvestment opportunities
Infrastructure joint projects for enhancing export capacity, such as bonded
warehousing, auction systems, and commodity logistics systems
Establishing foreign trade relations, particularly to Australia and Indonesia, with
linkage to broader regionaltrade conduits and international trade commissions
Web-based linkage to international trade and investment networks and multi-media
products
Promotional packaging of investment and trade opportunities, informational
brochures, and multi-lingual materials for domestic and foreign dissemination
Database management of exports and imports, companies, industry growth, and
tourism, as part of a comprehensive departmental data management system
Program 2: Policy and Regulatory Development.
14.89 The principal objective of this program is to develop an integrated trade policy that
addresses foreign trade, company licensing, regulatory authority to protect the environment, and
to give incentive to businesses. The Division of Trade will not be in a position to pursue
unilateral legal or policy initiatives, yet it will be important to policy development and the
regulatory operations required under a trade regime.
14.90 The projects to be implemented under this program are the following.
a) Domestic trade policy
b) Foreign trade policy
c) Support for cooperative development of trade and customs law
d) Develop a regulatory system for foreign trade licensing and monitoring with
accountability for customs or tax reporting
e) International trade agreement accession
f) Creation o f policy instruments for export incentive programs or domestic
development that reduces dependencies on imports
g) Establish trade-related government support activities for SME development and
enhancement of informal sector participation through such activities as cultural
products and services and handicrafts
259
h) Create a liaison function within trade to coordinate trade and investment activities
with departments of environmental protection and relevant divisions concerned with
mineral and natural resources
Program 3: Divisional Training and Development
14.91 Because trade represents a complication field with many different constituent interests, it
i s essential to have on-going staff training and capacity building within the MEAD, and
externally with agencies accountable for supporting trade endeavors. Therefore, the Division of
Trade will create a body of training materials and information under a model that can be
replicated and updated as trade and private sector activities accelerates.
14.92 The projects to be implemented under this program are:
Develop training materials and workshops on trade, regulation of trade, management
of trade transactions and financing, and use of network systems for regional and
international trade legations
Develop multi-lingual training and trade management materials to enhance
departmental, governmental, and foreign legation trade management and promotion
capabilities
Establish regular staff training and periodic seminars and workshops with technical
assistance (donor related) on trade, customs, trade expediting, and related topics of
investment, import controls, andjoint development projects
Contribute materials on workshops and trade information to the departmental
database, and ensure access to web-based and archive informationresources
Establish a media liaison domestically and through trade legations for public relations
and trade-related development news
Program 4: Business Registration:
14.93 The existing Business Registration Unit i s the only effective national point for company
registration, and it i s a fee-based service. However, there will be a far more important role for the
registration process as a commercial code and a company law are enacted (in whatever form
those take), and a complementary activity under a registrar for foreign investments. The
institutional structure o f these licensing (or registration) processes has yet to be solidified, and
indeed, the position of the current registry may be within another ministry. As a planning
scenario, the BRU staff anticipates an enlarged role with far greater responsibilities and more
pressing demands. These are listed here under "projects" but are more accurately "functional
activities."
14.94 The projects to be implementedunder this program are the following.
a) Establish an effective and comprehensive registration process for domestic and
foreign companies with appropriate regulations on licensing and permits
b) Create a fee-based registration process that i s equitable among different
classifications o f enterprises and commercial activities
260
c) Technical assistance to develop effective use of registration income, if not accruing to
the general budget, for relative private sector development or enhanced management
of the registration process
d) Information database
e) Establish a compliance methodology for equitably monitoring registrations, ensuring
legal procedures, and accounting for new, terminated, and inactive enterprises
f) Technical assistance for institutional restructuring that solidifies activities of
registration with commercial codes, company laws, the foreign investment law, and
other regulations under appropriate ministries
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Objectives Performance Indicators
1. Increase the level and diversity of 0 Percent increase of exports
exports and earn additional foreign
revenues 0 Number of new products or repackaged products
exported
0 Percent contributionto GDP
0 Rate of growth of exports by sector
2. Maintain an open and competitive 0 Comparative trade regime to trade partners without
foreign trade regime disparities
0 Trade balances
3. Explain the benefits of maintaining Number of media events, seminars, and trade
good trading relations and resisting programs
protective tariffs
0 Proportional participation by all sectors and
classification of individuals in trade events
0 Absence of protective regulations or implementation
of incentives
4. Seek membership of certain 0 Progressive participation by East Timor in ASEAN
regionaland international trade and other Pacific Rimassociations
groups as appropriate
0 Recognitionof East Timor for observer status and for
membership in key regional associations
5. Reduce the trade deficit 0 Percentage growth of exports in excess of percentage
increase in imports
0 Reduction of trade gap by each major sector with oil
and gas interest tracked independently
0 Reductiondue to oil and gas exports
6. Improve the information systems of 0 Accomplish institutionalrestructuring
the Business Registration Unit
0 Implement enforceable registration system for
domestic and foreign enterprises
0 Increaserevenues from registrations
0 Reduced time for registration
7. Add value to export products using Value chain analysis of technology implementation
new technology spillovers from from foreign investments
foreign investment Analysis of secondary market for replacement
technology
0 Improved productivity
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15. INFRASTRUCTURE
"Having an effective system of physical infrastructure and services is crucial
for agricultural productivity and poverty reduction, a determinant of business
investment, instrumental to human development, and the foundation for
private sector development."
15.1 To plan for, provide and manage physical infrastructure that i s efficient,
cost-effective and financially sustainable, and which supports the social and
economic development priorities o f the people of East Timor.
ION
15.2 Infrastructure i s an issue of overarching importance to all sectors of the
economy and society. This includes the physical capabilities and service systems
that provide to all people the essentials of electric power, water, sanitation, postal
services, telecommunications, roads, air and sea transport facilities, and various
support services. Infrastructure has perhaps the strongest cross-sectoral
implications for national development. Having an effective system of physical
infrastructure and services i s crucial for agricultural productivity and poverty
reduction, a determinant of business investment, instrumental to human
development, and the foundation for private sector development. Infrastructure
represents many diversified responsibilities, and through the Working Groups
established the vision statement above on which to pursue priority development
activities.
15.3 As background to this plan, it must be emphasised that infrastructure is in
a poor state, substantially damaged and in some instances obliterated by years of
conflict and lack o f meaningful maintenance. Reconstruction efforts have been
progressive with airports and seaports operational, major road repairs and
maintenance programs underway, and to a significant degree, water supply and
sanitation services restored. Substantial progress has been made to reconstruct a
majority of the damaged buildings and houses through humanitarian relief work
and donor reconstruction programs. Telecommunications services have been
restored using largely temporary measures supported by UNTAET and through a
communications system contracted with an Australian company. Postal services
remain very weak. Electricity generation i s now near to its pre-1999 levels o f
supply and reliability, but there has been insufficient progress in puttingthe power
sector on a sustainable footing.
15.4 The Infrastructure Sector as presented in this Plan i s treated as the
collective efforts of many directorates. (The term "Division" i s used for
directorate to distinguish it from the administrative department.) Officially, there
i s no infrastructure agency. Instead, it consists o f Divisions under three separate
Ministries. The Ministry of Water and Public Works (MWPW), recently
reorganised, has four functional Divisions under the Director-General of one
department. The Ministry o f Economic Affairs and Development (MEAD) has
one infrastructure-related activity, the Division of Energy, which reports directly to the Minister.
And the Ministry of Communications and Transport (MCT) has five Divisions administered
under the Director-General o f one department. These Divisions have unique responsibilities, and
budgetary accountability i s within their respective ministries. However, activities among the
various Divisions are captured in this planning document, often resulting in a consensus voice,
yet because the individual Divisions have differentiated priorities, this plan addresses each
separately. Table 15.1 summarises the structure used within the report while the term
"Infrastructure" i s used as the collective initiatives of all concerned.
Table 15.1 Planning Structure of Infrastructure Sector
Ministry Division (Directorate)
Water and Public Works 0 Public Works
0 Roads, Bridges and FloodControl
wss
0 Research and Development
Economic Affairs and Planning 0 Division (directorate) of Energy: EDTL,
operates as a Government-owned company.
Communications and Transport 0 Land Transportation
Civil Aviation
Sea Transportation
0 Telecommunications and Post
0 Meteorology
LSOFINFRASTR
15.5 The Infrastructure Sector will emphasise nationalpriorities of economic development and
a strong commitment to poverty reduction throughout its department activities. In essence, the
role of government will be strongly focused on establishing physical capabilities and public
services required for sustained development. Consequently, there are two overarching
infrastructure goals that amplify the sector vision. They are:
a) to minimise adverse impacts on the natural and human environment, and to take
account o f the needs and aspirations of those disadvantaged by poverty, remoteness
and difficulty o f access to infrastructure services; and
b) to regulate the sector so that infrastructure and services are safe, are provided at a fair
price, and give maximum opportunity for Timorese people and enterprises to
participate in their construction, management, operation and use.
264
15.6 A composite approach to development permeates the Infrastructure sector even though
each o f the departments operates within differentiated and independent parameters. There are
several guiding principles that underscore the major development goals and provide a foundation
for accountability. These are as follows.
To pursue infrastructure development that is safe and that can provide accessibility to
needed services and utilities by everyone.
To pursue activities that bring infrastructure and services to the disadvantaged, thus
encouraging economic growth while reducing poverty.
To create an enabling environment required for sustained development while ensuring
a regulatory process that guarantees fair prices without corruption, effective revenue
management, and transparent public administration.
To work in cooperation with other Government ministries, agencies, district
administrations and communities in ensuring the efficient delivery of services.
To utilise the private sector to the maximum extent possible in the cost effective
delivery of projects, programs and services, and to support and promote the
development of the private sector in this role.
To promote whenever possible equity between regions and between urban and rural
communities.
To ensure the protection of the natural and man-made environment, safety from
natural disasters, and the protectionof human life.
TER AND PUBLIC WORKS)
15.7 Following recent restructuring, the Office o f Director-General (ODG) under the MWPW
now has management responsibilities for public works administration of four Divisions. These
concern public works, roads, bridges, and flood controls, water and sanitation, and research and
development. These are more fully explained under Division plans. The Director-General's
Office has overall department responsibility, represented by the following operations and
department services.
Financialplanning, management, budgeting and control.
Human resource management and departmental coordination.
Procurement services including civil works equipment and services (in accordance
with technical requirements of directorates).
Management o f departmental assets.
Provision and operation of facilities to enable directorates to pursue their programs
and project activities.
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15.8 The ODG as the operational arm under the Ministry has several important inter-ministry
tasks, These are not presented here as distinct programs or projects, yet they are focal activities
that must be accomplished. These are to achieve interdepartmental integrated ministerial
agreements, largely directed toward capital assets and development responsibilities. The five
main concerns are as follows.
An agreement on responsibilities with all ministries on capital allocations for new or
renovated offices, and future roles for maintenance.
An agreement with constituent ministers on use of natural, mineral, and water
resources for public works and construction.
An agreement with appropriate departments in agriculture, fishing, and forestry, and
those concerned with the environment for use o f surface water, responsibilities for
rivers, various maintenance requirements.
An agreement with Communications and Transport that covers all public works
activities requiring equipment, transport, and national communications assets.
An agreement with Industry, Trade, and Tourism regarding development and
maintenance of industryparks, business centres, or tourist structures.
RKSDIVISION
15.9 The Public Works Division under the ODG and the MWPW i s concerned with
reconstruction of public buildings in Dili and the nation's districts, oversight of tenders for new
public construction, coordinating public housing (government facilities) in Dili and the districts,
and institutingurban planning. Division responsibilities focus on reconstruction and new public
development of facilities, but activities each beyond the Division to include cross-cutting
interests of other ministries and Divisions. The Division's objectives, strategies for pursingthose
objectives, programs and projects are described in the following passages.
Public Works Objectives
15.10 The Division's objectives reflect its primary responsibilities yet also accommodate
interdependent activities of other agencies, such as coordinating urban development plans that
must coincide with road, traffic, and public utility services, and regulatory issues that involve
other departments and ministries. These are the following.
To reduce housing shortages in urban centres through improved planning and
regulation in support o f national policies.
To improve housing facilities in urban slum areas through planning, contracting,
engineering services, and cooperative support for poverty reduction initiatives.
To provide structural development and essential public services while minimising
adverse ecological and environmental effects.
To provide engineering services for the design and implementation of public
buildings, government staff housing, and associated facilities as required to support
government development programs.
266
e) To facilitate the improvement of spontaneous housing settlements through planning,
design, and implementation of micro infrastructure utilising community participation
and management approaches.
f ) To implement urban development planning and control systems in Dili and district
capitals including urban land use planning, development control systems, and
buildingregulations.
g) To pursue human resource development with a sustainable staff with technical
capabilities for management of a diverse program of public works development.
Constraints, Problems, and Issues
15.11 The Division faces constraints similar to all other Divisions and directorates, primarily
thus concerned with severely limited budgets and the lack of well-qualified human resources in a
number of areas that require very specific technical education and experience. The Division also
lacks a legal foundation for pursuing many necessary projects, and it faces logistical challenges
of serving rural areas or administering district programs. With that said, many of the objectives
and program activities are aimed at resolvingthese problems, not treating them as uncontrollable
barriers to development. Several points are illustrative:
Legislation and a regulatory framework. Lack of an enabling environment
constrains the Division from pursuing medium-term and long-term objectives, and
therefore it i s essential that the ministries (with departmental and Division
cooperation) initially pursue laws that will provide building and land codes, housing
policies and construction standards, and empower Public Works and other constituent
Divisions to pursue urban, rural, and regional planning.
Human resources. A majority of proposed programs and projects under this plan
cannot be realised without technical expertise. In the near-term, donor assistance may
fulfil these needs, but the Division will require staff with a broad range of technical
skills that include: urban planning and design; community development; townscape &
landscape architecture; all relevant engineering; land surveying; and cost estimating.
Support facilities and funding. Oversight and management of public works,
tendering and follow-on quality control, and actual the environmental necessities of
urban and rural district projects will require laboratory testing and inspection
processes which do not exist nor are they funded. Public works activities require rural
presence, travel, and a project management/monitoring process that will require
capital and staff beyond the scope o f this plan.
Public Works Strategies
15.12 Public Works will develop a legislative framework to address relevant infrastructure
policy issues, and generate the regulations required to appropriately implement and manage
operations. Much of the legislative and regulatory framework will be derived from experiences
of other countries, adapted to the particular socio-economic and cultural conditions in East
Timor.
15.13 With departmental support, local human resource capabilities will be enhanced through a
number of skills training programs developed over the five-year planning period. Immediate
human resource needs, particularly those for higher-skilled and experienced experts, will require
near-term recruitment and external assistance.
267
15.14 The Public Works Division, other government agencies and ministries recognise the
importance of a GIs. Public Works i s willing to be responsible for establishing an GIS that could
become a national asset for broader utilisation, but wherever the GIS i s positioned, it will be an
essential tool for the Division in terms of urban planning, construction, and development.
15.15 Public Works will implement the engineering design and supervision processes for public
buildingsand housing construction. The Division will establish outsource and tender procedures,
then ensure oversight of projects in cooperation with the respective constituent fundingDivisions
or ministries. Current projects, and those in the near-term, are funded under TFET; larger future
projects will require donor assistance.
PublicWorks Programs & Projects
15.16 The Divisiqn of Public Works has structured individual project activities under five
programs. It i s understood that the ODG will also be addressing integrated activities for
administrative training, planning, and capacity building that concerns all Divisions within the
department while specific technical training will be addressed by the separate Divisions. Fully
descriptions o f programs and projects are contained in detailed planned documents by each
Division.
Program 1: Institution Building
15.17 The focus of this program is to draft and Implement planning guidelines, draft regulations
for public works, implement housing standards, create buildingand construction codes, address
both public and private land utilisation.
Draft PlanningAct and with Timor Planning Institute.
Capacity building for staff planning, urban planning, rural development at national,
district, and village levels.
Draft a Housing Policy and establish regulations on public and private housing.
Draft a National BuildingCode.
As an activity in support of the Building Code, formulate Industry Construction
Standards.
Establish a Works Specification and Cost Analysis procedure for all tendering and
procurement.
Program 2: Urban Planning
a) DiliZoningPlanunder the DiliDistrict Administration.
b) Central-South Dili, Central-North Dili,East Dili, and West Dili Land Use Plans
c) Baucau, Suai, and Maliana Strategic Zoning Plans and Land Use Plans
d) LiquiGa, Manatuto, and Ermera Strategic Zoning Plans and Land Use Plans
268
e) Lospalos, Viqueque, Aileu, Ainaro, Same, and Oecussi Strategic Zoning Plans and
Land Use Plans
Program 3: Slums Improvement
a) Central-South Dili Slums and Central-North Dili Slums ImprovementProgram
b) East Dili Slums Improvement Program and Study of West Dili Slums
Program 4: Provision of Government Buildings
a) Renovation of MWPW Offices
b) Renovation o f District Offices for Water and Public Works
c) Renovation of Ministry of Internal Administration Offices
d) Renovation o f Ministry of Agriculture Offices
e) Renovation of Customs Offices under the Ministry o f Finance
0 Establish and Renovate a National Registry Building
g) Renovation of Judges and Prosecutors Housing (Central and Districts)
h) Renovation of District Offices (Covalima, Lautem, LiquiGa, and Viqueque)
i) Renovationo f Warehouses/Workshops (Viqueque, Lospalos, Suai, Oecussi)
j) Renovation of 65 Sub-district Administration Buildings
k) Renovationof the Presidential Office
1) Renovation to Establish a NationalArchives Building
m) Renovationo f MFAC Offices
n) Renovationo f M C T Offices
0) Renovation o f M o H Offices
p) Renovation o f MAF Offices
q) Renovation o f Ministry o f Labor and Solidarity Offices
r) Construct a New CentralBank Building
Program 5: Public Education and Training
a) PlanningPrinciples Training at National and District Levels
b) Planningprinciples Training at Sub-District and Village Levels
c) NGO and Government Workshops on Urban and Rural Planning
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Table 15.2: PublicWorks PerformanceIndicators
Objectives PerformanceIndicators
1, Reduce housing shortages in 0 Urban Land Use Plan Completed
urban centers through improved
planning and regulation in Urban Development Controls Implemented
support o f national policies. 0 GIS Utilised for Integrated Planning
0 Assessment to Reduce of Housing Shortage
2. Improve housing facilities in 0 Urban Land Use Plan Completed
urban slum areas through 0
planning, public contracting, Urban Slum Areas Reduced
engineering services, and 0 Assessed Access to Public Facilities
cooperative support for poverty GIS Utilised for Integrated Planning
reduction.
0 Assessment of Reduced Slum Population
3. Structural development of 0 Percent Increase in HouseholdAccess to Public
essential public services while Utilities
minimisingadverse ecological
and environmental effects. Assessment o f Improved Urban HealthEnvironment
0 Reductionin Environmental Hazards
4. Engineeringservices for the 0 Percent of Public BuildingsEngineered and
design and implementationof Reconstructed
public buildings,government
staff housing. Percent of Government Staff Adequately Housed
5. Improvement o f spontaneous 0 Improved LivingConditions Assessed
housing settlements through
planning, design, and 0 Settlement Areas Planned
implementation o f micro 0 Extent o f Community Participation
infrastructure utilising 0 Micro Infrastructure DesignedImplemented
community participation
6. Urban development planning 0 Urban DevelopmentPlan Assessment Implemented
and control systems in Dili and
district capitals. Diliand District CapitalPlans Completed
0 DevelopmentControls inPlace
7. Human resource development 0 100% Staffing for Management
with a sustainable staff of
technical experts and capabilities 100%Engineeringand Technician Targets
for management. 0 Achieve 100% District Supervision Levels
270
R ES
15.18 The Division of Roads, Bridges, and Flood Control (DRBFC) i s primarily concerned
with regulation of roads and roadway reserves, management of tenders and maintenance
contracts on roads and easements (including environmental concerns of related development),
planning and legal classification of roads, coordination of traffic regulations with the MCT, and
the hydrology and soil mechanics o f bridge and adjacent roadway development.
DRBFC Objectives
15.19 Guiding principles under the department mandate coupled with similar principles
established within this Division largely determine DRBFC objectives. Specifically, the Division
has responsibilities to assure all citizens of parity in road and transport access within
development constraints, and also to ensure the needs of national security and defence are
accommodated in roads, bridges, and flood control activities. The Division will face constraints
but will seek to fulfil the following objectives.
To identify the national district and rural road network essential for the support of economic
and social development.
To initiate policies within a legal and regulatory framework for order of the territory that
improve quality of life, encourage private enterprise, and assist those with access and safety,
particularly in impoverished areas.
To develop roads, bridges, and topologies of flood controls that provide environmental
protection and further reverses existing ecological damage.
To ensure development and regulation for the safe circulation of transport.
To ensure transport infrastructure that meets national defence imperatives
To establish technical standards for a national road network.
To preserve the existing road assets as the first priority through sustainable maintenance and
long-term management plans for support systems.
To establish an institutional structure and develop technical and administrative capacity of
Timorese staff to manage, maintain and improve the road network.
To implement sustainable strategies for the maintenance of rural access roads.
To establish and implement sustainable erosion control measures to prevent damage to
physical Infrastructure and economically valuable property.
Constraints,Problems and Issues
15.20 The most significant immediate constraints should be viewed as opportunities for the
Division and other government agencies to strengthen the existing poor structure o f the legal and
regulatory environment of East Timor. In addition, the constraints faced in human resources and
lack of local technical skills can be viewed as an opportunity to create new jobs and greater
professional capacity in the nation. Some constraints, however, are not immediately controllable
271
and represent barriers to effective program implementation. Several key points are emphasised
Legislation. Agreement on roles and responsibilities between the MWPW and MAF
are needed to protect and improve the environment around roadways, bridge sites,
and riverbanks. Concurrent environmental protection regulations are essential.
Legislation that defines road reserves, drainage easements, and access to land for
construction and maintenance will also be required. And regulatory guidelines are
needed on utilisation of natural and mineral resources.
Humanresources. The flood control activity cannot be pursued without recruitment
of experts or external (donor or contractual) assistance. The nation does not have
these core capabilities to recruit in the near term. Requirements in particular include
hydrologists, geologists and soil mechanic experts, and environment specialists.
Equally important, there i s no local indigenous capability to train specialists or to
provide the mentoringrequired.
Support systems. Procurement systems and logistic are inefficient, and the ability to
provide private sector support is nascent. In effect, there i s not sufficient equipment
or private contractors to pursue many of the priority projects, and little capability to
maintain road, bridges, or conservation facilities. Regional offices and
communications are problematic, and there i s little capability to provision or 'equip
the districts for rural road and bridge development. The types of equipment
employed in East Timor, and their respective technologies, are far less than optimal.
DRBFCStrategies
15.21 Policy and legislative initiatives will be pursued through the Land and Property Unit, and
inconjunction with the MCT and the MAF (particularly the Director of Forestry). These liaisons
are essential for an integrated strategy of development to address a broad range of cross-cutting
issues relating to land use, roadways, water rights, forestry and mineral appropriations, and
regulations for roadway utilisation, vehicles, and coordinated water and sanitation development.
Creation of a road classification system will also be a strategic coordination process with other
ministries.
15.22 An Inter-departmental commission will be established for land transport regulations,
oversight responsibilities for traffic, and vehicular safety. In addition, there i s a role for NGOs
and external expertise, including socio-cultural interests and those most able to address rural
population problems and poverty reduction, to address infrastructure priorities within the context
of community development and environmental protection.
15.23 The Division will develop human resource capabilities within its limitations and seek
recruitment for higher skills when possible, but in the near term, the Division will continue to
rely on existing (in progress) projects under international donors and activities being pursued
under TFET funds that bring to East Timor the necessary technical experts. Over the five-year
planning period, the Division will seek to create the local capabilities for sustained training and
mentoring.
15.24 A strong priority will be placed on private sector contracting and outsourcing,
maintaining internal oversight for tenders and continued monitoring. The Division will seek
cooperative assistance to develop the technical standards required for road building,
maintenance, inspection, materials management, bridge engineering, flood controls and district
272
water resource utilisation, and conservation as it applies to national roadway plans and respective
urban road and street development.
15.25 A priority will be placed on reconstructing and expanding the main national road
network, thus reaching well into the districts and rural areas, but also supporting industrial
development initiatives and the priorities of airport and seaport facilities. Only emergency work
will be carried out on sub-district and feeder roads in the budget period, and any periodic
maintenance or capital works on urban roads must be addressed outside CFET or existing TFET
project allocations.
15.26 Multilateral and bilateral donors require, as a priority, to ensure funding for periodic
maintenance programs, and realistic plans funding upgrading programs and new capital projects
for bridges or flood control projects. Consequently, the Division must be part of a broader
ministry effort to secure infrastructure development assistance, and to those ends, the Division
will develop appropriate scenario plans for systematic capital development with long-term
funded maintenance programs.
DRBFCPrograms & Projects
15.27 The Division does not have specific responsibilities for "institution building," yet it will
play a vital role in achieving the agreements under the ODG for natural resource utilisation,
responsibilities for roadway and river areas, and cooperative work with Divisions concerned with
water, sanitation, and environmental protection. The Division as it is now structured also i s part
o f on-going projects previously funded (TFET Iand II), yet these will not be oversight
responsibilities of other directorates. With that said, the DRBFC will focus technical projects
under two mainstream programs, and one program o f public safety designed to become a
standing process. These are summarised below:
Program 1: Road & Bridge Rehabilitation and Maintenance
15.28 First priorities during the early stages of this planning period are for road and bridge
maintenance. There are several projects well underway, each with TFET funding, and several
with preliminary interest for donor support. Secondary priorities concern road and bridge
upgrading with long-term plans capable o f networking the country with effective and safe
ground infrastructure to serve the entire population.
Road Maintenance for Current Requirements (TFET)
Small Bridge Maintenance and Replacement (TFET)
Road Maintenance in Core Network and Districts (2002-2007)
Major Maintenance, Re-alignment, Resolving Slips & Washouts (2002-2003)
Casa and Natarbora Bridges (2202-2004)
Bridge Causeway Construction (2004-2007)
Periodic Maintenance of Core Network and Districts
Cooperative Planning for Urban and Rural Development for Road & Street Access
273
i) Upgrading and Widening to Extend Core Network and District Transport
Program 2: Flood Control and Erosion Prevention
15.29 Flood control and erosion prevention are issues interdependent with water and sanitation,
agriculture and forestry, and environment agencies. Development must be coordinated, and
Division projects represent two yet-to-be planned project areas.
Projects
a) Flood Control Emergency Plan for Endangered Roads and Bridges
b) Flood Control and ErosionPrevention Systems Planning
c) Flood and Erosion Control Bridge and Site Structures
Table 15.3: Roads,BridgesandFloodControlPerformanceIndicators
Objectives PerformanceIndicators
1. Identify and plan the nationaldistrict Plan completed and approved
and rural road network Assessed road access to population
2. Initiate policies within a legal and Laws enacted and regulations approved
regulatory framework
3. Develop roads, bridges, and topologies Number of road closures
of flood controls Number of new roads and km.
Area o f new and repaired pavement
Number of water retaining wallskulverts
Reductioninflood damage
4. Development and regulation Assessed accident and damage rates
management for the safe circulation of
transport Diliand District traffic plans completed
Percentage of projects on time
Percentage of projects within budget
5. Establish transport infrastructure that Assessment of defence access needs met
meets national defence imperatives Access to security posts
6. Establishtechnical standards for a Number of days per year road closure
national road network Percentage of population with all-weather
access to road utilisation
Percent of road meeting vehicle load capacities
Cost ratio of maintenance
7. Implement capital improvements to the 0 Achieve capital funding for roadways
road network 0 Achieve capital funding for flood control
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Preserve the existing road assets 0 Number of road with maintenance achieved
through appropriate Of road 0 Kmof roads and percent maintained
funds and a system of sustainable
maintenance 0 Percentage o f maintenance on time
Establish an institutional structure and Division staff and management approved
develop technical and administrative Qualifiedtechnicalstaffing levels met
capacity
0 Certified staff levels attained
10. Implement sustainable strategies for Rural road maintenance plan approved
the maintenance of rural access roads Number o f roads maintained under plan
0 Kmof rural roads maintained
11. Establish and implement sustainable Number o f reduced flood-related incidents
erosion control measures 0 Percent reductionfor road maintenance
0 Assessment of environmental impact
12. Enhance human resource capabilities Number of local qualified staff
for sustained indigenous development Number participatingin training workshops
0 Percentage retained and aualified
SANITATION DIVISION
15.30 The Water and Sanitation (WSS) Division i s responsible for establishing the legal and
institutional framework for water utilisation and sanitation controls, managing the integrated
activities of water and sanitation engineering, water quality control, relevant development and
maintenance contracts, and establishing support activities (e.g., customer services, materials
warehousing, waste collection vehicles, and waste tanks or sites). The WSS Division also will
initiate a program of public information and education workshops to promote safe water and
sanitation practices.
WSS Division Objectives
15.31 The Division has aggressive objectives to pursue safe water and sanitation throughout
East Timor, but realistic expectations must be appreciated for each o f the long-term objectives.
The Division will prioritise its efforts with respect to each objective and in general pursue
incremental cost-effective programs that can progressively improve human welfare. Primary
objectives for administrative responsibility include the following.
a) To provide adequate, safe and sustainable water supplies for the communities of Dili
and major urban centres in districts, with the aim o f full cost recovery from users of
the water supply.
b) To facilitate adequate, safe and sustainable water supply and sanitation for village and
rural communities through community-managed water and sanitation facilities.
c) To facilitate at a National level the safe disposal o f sewage and wastewater in urban
areas.
275
d) To facilitate at a National level the collection and safe disposal of nuisance surface
waters from major urban areas.
e) To facilitate at a National level the collection and safe disposal of solid and hazardous
waste from major urban areas.
0 To ensure the appropriate management of water resources for the purposes of water
supply and sanitation in cooperation with other relevant ministries.
g) To inform the public of safe water and sanitation practices that systematically
improve the environment and enhance human health and welfare.
Constraints, Problems and Issues
15.32 The WSS Division faces an uphill struggle with long-term expectations to achieve many
o f its objectives. Many of the constraints can be overcome through legislative enactments and
inter-ministerial cooperation, but funding i s a limitation that will persist. Social and cultural
constraints are viewed as challenging opportunities to enhance living standards and support
poverty reduction initiatives. These include the following.
a) Legislative. Agreements are needed on roles and responsibilities between the
MWPW and the Secretary of State for Natural & Mineral Resources regarding control
and management of water resources. The Division must also have enabling legislation
to pursue water and sanitation services, assess tariffs, and expedite procurements.
b) Humanresources. Like most Divisions, WSS is facing shortages of human resources
in the fields of resource management, sanitation engineering, quality control,
plumbing technicians, cost estimating, and public information specialists. Timorese
staff are not sufficiently skilled in current methods of water and sanitation systems to
administer, cost, plan, or manage.
c) Support facilities. There i s a pressing need for customer service centres and
warehouse, technical workshop areas, drilling and well equipment, heavy equipment,
waste tanks, and procurement of sanitation materials and supplies, including vehicles
for waste collection and recycling. There i s no effective capital budget for these
activities, and limited funding for maintenance.
d) Social and cultural issues. A majority o f the population has had little or no
experience with modern water or sanitation processes, and do not understand the
hazards of unsafe conditions nor how to resolve them. What they cannot understand
or see for themselves cannot motivate them to change behaviour. The health problems
of East Timor, sanitation safety, social improvement of fundamental living
conditions, improved agricultural health systems, and the simple act o f clean living in
decent surroundings will require a pervasive change in human behaviour. This
becomes an enormous challenge for government and social leaders, but in particular a
challenge for the Division.
WSS Division Strategies
15.33 The Division will be part of an integrated team comprised of staff from the three
ministries to develop an effective body o f infrastructure-related legislation. This i s essential to
address during the first two years o f the plan, resulting in a legal basis for design and planning of
water and sanitation systems in concert with road building, bridge work, flood control, and
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priorities of environmental protection. Such an integrated approach will include representatives
of health and community development agencies, and the real property and land management
staff from several ministries.
15.34 A similar integrated process must be established for long-term operational planning and
development of water and sanitation resources. This will involve a commission that can plan and
implement programs for district and rural (village) public works, specifically those for safe
water, options for disposing of non-solid waste and collection or recycling o f solid waste,
coordinating' priorities o f health authorities, and supporting programs of agricultural and
community development. A parallel commission will address public works and public health
issues for urban public works where special attention must be given to slum rehabilitation, street
construction and repair, water and sanitation related to public and commercial users, and the
wider ranging development interests for airports, seaports, industrial parks, and public recreation
facilities.
15.35 The Division recognises the importance of addressing high-priority objectives related to
poverty reduction, improved conditions for human health, and such problems as urban slums and
extreme rural isolation. Consequently, during the first two years of the planning period, the
Division will concentrate on service delivery requirements for safe water and adequate sanitation
for these and other high priorities.
15.36 The Division will seek to ensure that adequately trained or skilled personnel will be
maintained for addressing water and sanitation service programs in Dili and primary urban
centres during the first three years. This will involve budgeted capacity buildingtraining with a
continuation of existing transitional donor support programs. During the latter half o f the five-
year planning period, water and sanitation will require support for rural and district staff training
and development, and more extensive technical expertise, which can be partially addressed
internally and partially with donor support.
15.37 The Division will seek the most cost-effective way o f implementing programs,
conducting assessments, and fulfilling projects. Competitive bids and tenders will be stressed for
optimal participation by private consultants and contractors, not only for designing and
implementing projects, but for potential investments in water and sanitation facilities, supplying
materials and fixtures, and maintaining these systems.
15.38 It will be essential for the Division to address the social and cultural patterns of water and
sanitation utilisation. Therefore, the Division will establish a program of public information and
education on water and sanitation issues, and in the long term, one that can lead to an informed
public capable o f self-managed hygiene.
WSS Division Programs and Projects
15.39 After recent reorganisation within the department, the WSS Division has identified four
core programs. The first, concerned with capacity building, include the Joint departmental
training and staff recruitment responsibilities. These are interdependent activities while
remaining programs address technical project activities.
Program 1: Institution and Capacity Building
15.40 Training and capacity building will occur through inter-Divisional workshops and
programs designed to reach a wide constituency that includes NGOs and government staff. The
Division will focus on specific projects are noted below.
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Projects
a) Draft Water Resource Management Policies and Regulations
b) Draft Water Legislation and Regulations on Water Rights and Utilisation
c) Draft Legislation and Regulatory Procedures for Water Supply Tariffs
d) Solid Waste, Waste Water, and Drainage Management Laws and Regulations
e) Community Water Supply and Sanitation Policies and Regulations
Program 2: Urban Water Supply
15.41 Urban water supply i s concerned with piped water to 13 urban areas and 12 district
capitals outside Dili. These parallel the public works urban planning list presented earlier, with
priorities of this Division directed toward projects noted below.
Strategic Planning for Water Resource Management (Master Plan)
Capital Works, Rehabilitation of Dili Headworks and Distribution
Capital Works, Rehabilitation and Augmentation of District Towns Water Networks
Operation, Maintenance, and Service Improvements of New Connections in Dili
Resolutionof Illegal Connections, Removals, or Legitimisation in Dili
Implement New Connection Services and Billing Processes for District Towns
Resolutiono f Illegal Connections, Removals, or Legitimisation in District Towns
Implement Billing and Technical Monitoring Systems Nationwide
Extend and Update Master Plan for Expansionof Water Services
Preparation of Database for Assets, Maintenance, and Water Systems
Development Systems for Water Resource Management
Program 3: Urban Sanitation
15.42 The Urban Sanitation program i s concerned with solid waste management, wastewater
and drainage, and safety of habitation within populated areas where there are priority problems
concerning collection and waste disposal.
Projects
a) Strategic Planning for all Urban Waste and Sanitation Models
b) Capital Upgrading of Solid Waste Management Infrastructure in Dili
c) CapitalWorks and Upgrading of Wastewater Collection and Treatment in Dili
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d) Augmentation of Drainage System for Dili
e) Capital Works Implementation for District Towns of Solid Waste, Wastewater
Collection and Treatment, and Drainage Infrastructure
f) Update to Efficient Sanitation Operations and Maintenance for Dili
g) Implement or Update Sanitation Operations and Maintenance in District Towns
Program 4: Community Water and Sanitation
15.43 This program i s designed to implement new systems for both water and sanitation
required in areas outside Dili and in the 12 district capitals. Projects reflect combined area or
district township activities.
Projects
a) Strategic Planningto Develop Best Practice Models for Rural and Small Towns
b) Capital Investment and Systems Development for WSS in Isolated Communities of
Atauro, Oecussi, and Others as Designated.
c) Develop and Implement Emergency Response Systems for Communities with
Respect to Water, Sanitation, Health Issues, and Disaster Relief
d) Revise Guidelines on Operations and Maintenance for Community Systems
Congruent with the Strategic Master Plan
Program 5: Water & Sanitation Supportand Public Safety
15.44 This program is concerned with human resource development beyond internal Division
staff to include district water authorities, community or private interests, and the public in
general as to water utilisation, sanitation systems, and human safety. There i s a strong emphasis
on HRD training that will require donor assistance with technical advisers, community
development experts, and NGOS capable o f supporting a public awareness program on such
issues as water safety, disease prevention related to water and sanitation, and attention to water
and sanitation standards.
Projects
a) Capacity Buildingfor WSS Standards and Safety
b) Community Development for Safe Water and Town Sanitation Utilisation
c) Enforcement processes for Illegal WSS Usage, and to Prevent Vandalism and
Destruction of Systems
d) Public Awareness of Safe Water Practices, Safe Habitation, and Good Hygiene
e) Public Media and SchoolPrograms for Habitation and Agricultural Practices
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Table 15.4: Water and SanitationPerformanceIndicators
Objectives PerformanceIndicators
1. Provide adequate, safe and sustainable 80% of urban population with access to safe
water supplies piped water
80% of rural populationwith access to safe
local water supply
2. Provision of adequate, safe and 100%of areas adjacent to urban centres with
sustainable water supply and sanitation appropriate access to water
for villagehural communities through
community owned and managed water 80% of villages and enclaves with access to
and sanitation facilities appropriate self-managed systems
80% of villages and rural communities with
effective sanitation facilities
3. Facilitate at a National level the safe 100%of urban areas with solid waste systems
disposal of sewage and wastewater in
urban areas 100%urban areas with wastewater systems
4. Facilitate the collection and safe Urban drainage systems in Dili and district
disposal of nuisance surface waters capitals
from major urban areas Reductionof hazardous water and flooding
5. Facilitate at a National level the Urban collection and disposal sites established
collection and safe disposal of solid and
hazardous waste from major urban areas 100%collection coverage for solid and
hazardous solid waste
6. Ensure the appropriate management of Effective regulations o f water utilisation and
water resources for the purposes of waste collection among ministries
water supply and sanitation in
cooperation with other relevant Ports and public water access regulated
ministries.
7. Inform the public of safe water and 100%of population reached with safe water
sanitation practices that systematically practices information
improve the environment and enhance
human health and welfare 100% of all schools with institutional
programs on safety in water and sanitation
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15.45 The newly created Division of Research and Development under the MWPW will
address a broad range of studies and pursue regulations on standards and norms for construction
and materials, building codes, fire retardant treatments, and quality controls in support of
departmental activities.
Research and Development Division Objectives
15.46 As a new Division, Research and Development will support the efficient operation of all
Divisions under the MWPW. It will play an important role for operational planning,
procurement, assessments, support for the Director General to manage assets, and working with
inter-ministry commissions for both rural and urban development. The Division's primary
objectives are as follows.
a) To ensure effective financial planning and budgeting through database management
and control systems.
b) To provide effective support for human resource assessments, capacity-building
support materials, technical research, and project costing and management.
c) To develop effective procurement processes including those for civil works
equipment and services, to support initiatives under each of the technical Divisions.
d) To provide the system processing methods and controls required for management of
public works assets.
e) To provide research support for, and liaison with, contractors and donors for
development of technical standards o f all public works activities.
Constraints, Problems and Issues
15.47 Legislation will remain a constraint until the integrated activities of the ministries and
various commissions empower public works administration to regulation utilities and the various
requirements for infrastructure development. As a new Division, R&D also has no explicit
budget allocation and lacks facilities, laboratory equipment, and technical staff. It currently
exists in name only and will evolve with the public works and infrastructure plans. Two
additionalpoints should be emphasised as follows.
a) In order to launch the Division, staff members are needed but not yet authorised, to
include a Civil Engineer and experienced Laboratory Technician.
b) The Division also will require a research workshop to design and create pilot
construction projects for the technical Divisions, and a laboratory for material and
construction testing. These are special-use facilities that may only be possible through
donor support or outsourcing in the short term.
Research and Development Division Strategies
15.48 The Division will form a commission with representatives from academia, the Architect
Association, Civil Engineering Association, Builders Association, Tradesmen Association, and
selected NGO's to review legislation and various models o f technical standards required in
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public works. These will include, for example, a draft Building Code prepared by the State
Government of Victoria for East Timor, feasibility for a variety of international standards for
adaptation in East Timor, and roadway and flood district construction standards modelled on
other Southeast Asian nations.
15.49 The Division will work closely with meteorology and utilise data from the GIS to support
infrastructure research and planning, and pursue private consultants and contractors to design,
test, and facilitate appropriate project proposals for materials, construction, and maintenance
operations. The Division will essentially be a planning, research, and oversight function for the
next several years, and in the long term, perform similar roles with greater technical participation
as laboratories, staff capacity, and facilities evolve.
15.50 With limited funding and high demand for services, the Division will rely on extemal
private consultants and experts, seeking extemal funding for assessment and research projects
apart from the recurrent budget or support through the ODG. Specific requests for research and
development intervention from technical Divisions will be supported through the requesting
directorate.
Research and DevelopmentDivision Programs and Projects
15.51 As a new Division without specific authorisation for portfolio development, the planners
have put forward two programs with only illustrative projects that should be expanded
significantly once empowered to pursue activities. All program and project initiatives are
supporting endeavours for the entire public works department.
Program 1: Development of Appropriate Technology
15.52 Concurrent with legislation and regulations on housing and construction standards, urban
and rural planning, town and community development, and the various projects under roads and
maintenance programs, Research & Development programs are essential to identify the best and
most appropriate technologies for East Timor. This i s a challenge in terms o f the topography and
climatic conditions.
Projects
a) Research on Bamboo Materials for Housing and Construction
b) Research on Concrete, Blocks, and Natural Materials
c) Assessments on Composites
d) Research on Alternative BuildingMaterials and Designs
e) Technical Assistance for Adaptation o f Intemational Recognised Building and
Construction Methods, and for Known Road and Bridge Designs
Program 2: Material and Construction Testing
15.53 This program has essentially one focus, which i s to support technology research and the
requests from any other Division for controlled laboratory testing. This would extend to natural
and manmade materials, and to prototype fabrications. Testing would represent quality control,
stress factors, endurance characteristics, water retention factors, fire retardants, and many other
physical considerations for public works activities. As the new Division begins, operations are
expected to be basic and restricted to priority public works efforts. These activities will also be
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constrained until the scientific and technology knowledge i s available to conduct more
sophisticated procedures. Initial projects are proposed below:
Projects
a) Constructionmaterial stress and utilisation testing
b) Alternative materials testing for strength, durability, and fire safety
c) Environmental Assessments for Potential Toxicity and Threats to Public Health
Table 15.5: Researchand DevelopmentPerformanceIndicators
Objectives PerformanceIndicators
1. Ensureeffective financial planning 0 Administrative systems and databases
and budgeting with database tested and effective
management
2. Support for human resource 0 Assessment models in use and effective
assessments, capacity-building
support materials, research for 0 100% on time provision of solicited
technical criteria, and project research
costing and management models 0 Project costing model completed
3. Develop effective procurement e Database procurement system effective
processes for civil works
equipment and services, to support 100%of on-time procurement requests
initiatives under each o f the e Reduction in backlog for logistics
technical Divisions e 100%sourcing for technical Divisions
4. Provide the systems processing 0 Buildingcodes and standards
methods and controls required for implemented
management of public works assets 100%compliance of codes and
standards
0 Construction standards implemented
0 100% compliance for public works
5. Research support and liaison with 0 Material testing laboratory established
contractors and donors for
development o f technical standards Alternative technologies models
of all public works activities researched
e Donor liaison office established
0 Reliable contractor Drocess established
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15.54 The Division of Energy i s maintained as a separate functional directorate under the
MEAD,and it essentially consists of the electric power generating authority for East Timor. The
power authority was created under the UN and transition government, and the Division of
Energy represents the administrative linkage for official development of public power capacity.
The power authority itself, EDTL has been established as a state-owned enterprise, required to
be financially autonomous, recovering its costs of operation and investment from electricity
charges. Currently EDTL i s jointly operated as a semi-autonomous authority with UN support
andjoint management.
15.55 EDTLi s receiving a high level of subsidy and having difficulty in progressing towards its
target of financial self-sufficiency. Authorities have been unable to establish an effective rate
structure, many users are not metered, and the metering system i s not reliable. Those problems
are complicated further by difficulty in collecting tariffs, illegal bypassing or system tampering,
and the reluctance to cut off power to users or block power utilisation. Demand for electricity
exceeds supply and will continue to rise more rapidly than new supply can be provided under
current operating capabilities. Also, the installation of effective metering systems and a
comparable system of effective maintenance and expansion must be addressed. Finally, essential
improvements are needed to manage the power sector, enforce an effective collection regime,
provide accountability for procurement of source fuels and supplies.
DIVISIONOFENERGY OBJECTIVES
15.56 The Division of Energy has expanded the vision statement to include a mandate to create
and maintain reliable and affordable power supplies. Ultimately, the power authority will meet
the needs for electricity throughout East Timor, thus supporting economic productivity and
quality o f life for all citizens, and pursue indigenous resources to displace imported fuels. This is
a long-term objective. In the near term, the Division will focus on development in Dili and key
population or industry development areas at the lowest possible cost to consumers. Objectives
include the following
To ensure an enabling legal and regulatory environment for an autonomous power
authority accountable for resource management and national power provisions.
To sharply reduce subsidies to the power sector to a sustainable level through
introductionof equitable but universal user charges for electricity.
To establish a transparent and auditable system of procurement and supply utilisation
with effective cost-recovery planning and development oversight.
To develop a self-sufficient management capacity for the power sector.
To complete installation of effective metering systems and provide for security of
those systems in Dili, and as power systems expand, to district users.
To develop national self-reliance in power generation by exploiting indigenous
energy resources such as natural gas, solar, and hydro as economically feasible.
To ensure coordination among govemment, donor, and private sector interests for
expenditures on power development over long-term planning horizons.
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DIVISIONOFENERGY CONSTRAINTS, PROBLEMSAND ISSUES
15.57 Many of the current constraints facing the sector are reflected in the objectives the
Division hopes to achieve over the planning period, but most notable are funding requirements
for all capital improvements and the high cost of recurrent maintenance and human resources.
Without legal empowerment, no agency of government can pursue meaningful initiatives.
Particular points to consider are as follows.
a) Operational limitations. High and unsustainable subsidies to the sector will continue
to retard capital development and threaten future programs of maintenance and
capital expansion that rely on predictable levels of income generated equitably from
end-user tariffs. These problems will continue to hamper service capabilities and the
provision o f reliable electricity services.
b) Management. The Division is capable of its existing oversight responsibilities, but
does not have the technical depth for strategic power planning or for pursuing
alternative forms of power generation. Capacity development i s essential, and within
the near term, indigenous staff must be able to supplant the technical expertise of
existing donor and UNsupported positions.
c) Power generation technology. There i s no medium- or long-term power system
development planning framework that captures the technical or capital asset
requirements for a viable electric power generating capability. Further, there i s an
assumption of public sector (state-owned) power resources without consideration of
benefits that could be achieved by private sector investment or BOT development
under long-term contracts.
DIVISIONOFENERGY STRATEGIES
15.58 The Division o f Energy will pursue a strategy of providing power capacity through
quality systems of physical distribution and reliable delivery services. This will require a staged
process of development, initiated through empowering legislation that enables an autonomous
EDTLto fully function, and consequently, to be fully accountable. A comprehensive legislative
framework i s needed that will be pursued under a high-level steering committee, assuring public
and private participation, to include appropriate donors and transitional interests, and to protect
the national interests of homeland security which vitally depends on reliable power capabilities.
15.59 Recognising that in the near term neither the Division nor the government can meet the
demand of power development, the Division will prepare feasible outlines for medium and long
term plans for current and future government, and for existing and potential donors who support
East Timor's efforts. In every instance, consideration will be given to the potential to involve
private sector interests in power sector development, investments, and new initiatives for electric
generation and distribution.
15.60 During the planning period, and perhaps well into the future, the Division will pursue
initiatives that explore alternative forms of electric power generation, such as using gas
resources, hydropower, solar energy, or perhaps another form or combination of fuels. Progress
rests heavily on the ability o f the power authority to reach the poorer regions and more distant
districts to support agricultural and industrial development.
15.61 The Division will seek the means to legally enforce revenue collection from consumers,
and the systems to support a fair and impartial process. In addition, the Division will study the
potential for models o f differentiated rates that would assist the most needy households,
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providing small and rural enterprises with power access, and that can moderate severe disparities
in power utilisation. Regulations will be implemented to resolve non-payment, disconnect
procedures, and illegal tampering.
DIVISIONOFENERGY PROGRAMSAND PROJECTS
15.62 The Division has one focal concern o f supplying reliable and sufficient electric power to
the nation. Assuming the current structure of EDTL, that overarching requirement will be
accomplished through three programs, each with projects or activities to be completed in the
short or medium term within the planningmandate.
Program 1: Institutional Development
15.63 Institutional development i s concerned with organising services and management o f
sector's activities. It i s also concerned with planning for transition to a quasi-public or
autonomous agency operated by contract or through a regulatory body.
Projects
a) Final Comprehensive Legislation for an Autonomous Power Authority
b) Investment Framework for Management o f Power Infrastructure
c) Formalise Steering Committee and Board of Directors for EDTL
d) Develop Manpower Structure for National and District or Rural Power Stations
e) Power Sector Assessment for Long-Term Private Ownership or Management
Program 2: Improvement of Services
15.64 Operational challenges must be met through a series o f projects with attention to internal
services administration and maintenance of assets. In addition, the sector i s concerned with
medium-to-long term expansion, staffing, and support services.
PMUCoordinationfor TFET-funded Operational Services
Amend and Implement Tariff Directive for Effective Enforcement Activities
Electricity Meters Installation and Repairs in Dili
Public Relations to Strengthen Enforcement of Non-payment and Vandalism
Administrative Handover and Systems Transfer at Comoro Power Station
Computer Systems and Information Technology Upgrade
District and User-based Cost Assessment and Consumer Survey
National Power DevelopmentPlan for Energy Resources and Services
Capital Development Plan for Rural and Disadvantaged Support Systems
j) Investment or Donor-supported Plans and Proposals for Rural Development, Social
Priority Programs, and Interventionfor Poverty Reduction Programs
Program 3: Capacity Building
15.65 Capacity building will occurs on two levels. First, projects will be directed toward
enhancing existing service capabilities and training local staff. Second, the EDTL will pursue
recruitment and appropriate donor-supported technical assistance.
Projects
a) Establish a Long-term Manpower Plan for District and Rural Development
b) Revise Existing Salary and Wage Structures within the Existing System
c) Recruit Locally and Train for Positions, including District Expansion
d) International Mentoring for Management & Technical Staff Development
e) Technical Team Job Development and Power Management Specialists
Table 15.6 Division of EnergyPerformance Indicators
Objectives PerformanceIndicators
1. Sharply reduce subsidies to the Reduced percentageof subsidies to budget
power sector to a sustainable Increased collection rates and enforcement
level Percent of budget self-generated
2. Establish a transparent and 100% audit and procurement tracking
auditable system of procurement Increased rate of cost-recovery from users
and supply utilisation with cost-
recovery planning
3. Develop a self-sufficient 100%staffed with qualifiedtechnicians
management capacity for the Percent of distribution system as planned
power sector with demonstrated Hours per day of public power supply in each
power capacity and services power centre served
4. Complete installationof metering 100%of business,public buildings, and registered
systems and provide for security household with meters
of those systems inDili,and as 100%of users officially subscribed inDiliand
power systems expand, to district district capitals
users
5. Develop national self-reliance in Percent economically-viable indigenous energy
power generation by exploiting sources intotal generation mix
indigenous energy resources such Assessed appropriate alternative power generation
as natural gas, solar, and hydro inall districts
6. Ensure coordination among Percent invested by private sector and percent by
government, donor, and private public sector on capital assets
sector interests for expenditures 100%target achieved for capital asset
on Dower sector development development
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15.66 The ODG manages five directorates that comprise the infrastructure sector
responsibilities under the Minister of Communications and Transport. These directorates
(Divisions) are addressed individually in following sections. Overall, the Department fulfils a
senior management and coordination role to support all five Divisions, specifically in respect of
capacity building, legislation and regulations, and support for recruitment, procurement, and
external liaisons. This represents internal services with managerial responsibilities that follow
below.
a) To ensure development of infrastructure services through the Divisions for land, air
and sea transport, telecommunications, postal services, and meteorology.
b) To create sustainable conditions for support of private sector development and public
sector initiatives among all constituent ministries.
c) To provide focal support for generating an enabling environment of legislation and
regulationrequired for operational mandates throughout the ministry.
d) To promote employment opportunities through effective management of this
ministry's directorates.
e) To coordinate and support efforts to develop technical specialisation and knowledge
within the Divisions and through the ODG.
FLAND TRANSPORTATION
15.67 The Division of Land Transportation i s the official body for vehicle registration and
vehicular traffic regulation. Its responsibilities include vehicle registration, vehicle inspections,
issuance of number plates, foreign and domestic vehicle documents, conduct driving
examinations, issue driving licenses, and maintain inventories of public and private transport
vehicles.
Divisionof Land TransportationObjectives
15.68 The Division i s a "service" function under a regulatory regime, and as such, i s
significantly understaffed. Staff are capable but not well-educated nor well-trained, and
consequently, even after reorganisation, the Division faces substantial capacity building and
recruitment challenges. The Division has focal objectives related to its service mandate and the
specific activities of land and vehicle regulation as follows.
a) To create the service infrastructure with competent and sufficient staff to support the
growing demand for land transport services.
b) To create sustainable regulatory processes for ensuring safe vehicular utilisation,
effective traffic control, and appropriate licensing and registration o f all vehicles.
c) To coordinate service requirements with those of road building, urban and rural
roadway construction, and infrastructure systems that can achieve the national
objectives o f economic growth and poverty reduction.
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To resolve the problem of saturation of major road arteries through improved
accessibility for outlying and remote population areas.
To reduce import dependence on oil by using alternative public transport and
improving energy efficiencies of vehicles permitted to register in East Timor.
To provide employment opportunities within the Division through effective job
development and capacity buildingprograms.
To pursue optimal models of regulation and technical knowledge from established
and comparable land transportation systems, incorporating these into East Timor.
To implement a national public safety program for driving and maintaining all road
vehicles through driver awareness campaigns and public information services.
To formulate regulations with traffic and vehicular rules governing safe and legal
vehicle operation, and enforcement capabilities with appropriate penalties.
To establish an effective policy for public transportation fees and charges, and a
retention fund for these revenues for enhanced public transportation.
Constraints,ProblemsandIssues
15.69 The Division faces several constraints that cannot be easily resolved, and several
challenging problems to address. These are not within the unilateral control of the Division or
the ministry, but require joint efforts by several govemment agencies, with technical support and
assistance. The following points should be considered.
a) Physicalinfrastructure.Physical disparities of road development exist, and there are
remote pockets of population without vehicles, trucks, or farm equipment. With the
Division centralised in Dili, there i s little capability of reaching isolated districts (e.g.,
Viqueque and Oecussi). The physical infrastructure of roads and bridges will not
reach into remote areas soon.
b) Traffic systems. Physical infrastructure will restrain service such as effective street
markings, intersection traffic control systems, signage, and resolution of commercial
traffic in congested areas. This i s particularly acute in Dili where port traffic i s
situated in the centre of the capital, and there i s no organised public bus transportation
terminal or organisation of routes.
c) Controland regulationissues.Not all vehicles are registered and there is no vehicle
inspection or safety control facility. These are minor requirements, yet crucial to
meeting objectives such as controlling emission standards, improving safe urban and
rural road utilisation, and regulating safe driving practices. These constraints also
prevent the Division from controlling contraband vehicles, ensuring public safety, and
providing reliable public transportation.
d) Funding and revenue diseconomies. Individual modes of transport do not always
pay for their costs, and cost-effective modes o f public transport are available only in
selective high-density areas. This leads to dysfunction of the internal market and
distorts competition within the transport system.
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Division of Transportation Strategies
15.70 The Division will pursue a comprehensive and integrated national transport planning
system to ensure efficiency and competitiveness of land transport providers and users. This will
require inter-agency and multi-Divisional efforts with the Department o f Public Works and both
air and sea transport planners. Ultimately, this i s a strategy of optimising scarce infrastructure
development funds to generate an integrated transportation system that can be sustained on a
national scale.
15.71 An integrated transport policy will include urban and land-use planning policies that can
encourage innovative approaches to congestion, unsafe roads, and better public transport. The
Division will pursue initiatives, such as improving mobility caused by unbalanced public
transport routes between home and work and long-term social and education changes such as
staggered working hours in congested areas, alternative school hours to avoid overcrowded
roads, and school bussing when it becomes feasible. The Division will also pursue alternative
means of commercial transport, such as promoting both public and private sector development of
coastal sea and inland waterway shippingand off-peak commercial road traffic.
15.72 The'Division will focus heavily on improving road safety. Road accident victims and
subsequent human and material costs cannot be calculated. The Division will seek to create the
capacity within its ranks to realistically assess accident rates and costs, and then strive to reduce
those costs and incidents over the ensuring years. This will be part of a strategic of public safety
awareness and information campaigns.
Division of Transportation Programs and Projects
15.73 The Division programs are concerned with three general issues: institutional and staff
development, traffic management, and vehicular regulation and safety. Each of these are bound
up with priorities under road, bridge, and flood control activities.
Program 1: Institutional and Staff Development
15.74 This program focuses on internal administrative functions and effectiveness o f staff in
Diliand the districts for vehicular services and traffic management.
Projects
a) Legislation in Urban and Rural Road and Vehicle Utilisation
b) Regulations for Vehicle Registration, Inspections, and Traffic Enforcement
c) Recruiting and Training, Technical Capacity for Vehicle Inspection and Safety
d) Capital Improvements, Equipment, and Vehicles
Program 2: Traffic Management
15.75 Traffic management includes operations for traffic planning, urban saturation issues,
coordinated road and bridge projects, and environment protection.
Projects
a) Street and Road Planning for Urban and District Capitals
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b) Urban Signage and Road Network Traffic Mapping
c) Procedures for Emergency or Disaster Traffic Routing
d) Saturation Assessments and Coordination for Port Services
e) Environmental Standards for Vehicle Fuel, with Regulations on Emissions
Program3: Vehicular Regulationand Safety
15.76 This program represents on-going activities more than projects that will ensure public
safety, reduce accidents, and generally enhance all vehicle operations.
Projects
a) Accident and Traffic Incident Studies
b) Accident Prevention and Auto Safety Inspection Initiatives
c) Public Awareness Campaign on Safe Driving
d) School Programs on Vehicle and Pedestrian Traffic Safety
Table 15.7: Division of Land Transport Performance Indicators
Objectives Performance Indicators
Create the service infrastructure e 100% of basic law completed by 2003
with competent and sufficient
staff to support the growing 0 100% staffing levels achieved and sustained
demand for land transport e Regulations and enforcement implemented
services
Create sustainable regulatory e 60% of sector policies defined in 2002
processes for ensuring safe
vehicular utilisation, traffic e 100% of policies implementedby 2003
control, and licensing and e Traffic control supervision 100%by 2004
registration o f all vehicles e National licensing 100% by 2003
e Traffic plans completed with Roads Division
Coordinate service requirements e Signage and traffic control in Dili completed
with those o f road building, urban
and rural roadway construction, e Roadway hazard rural signage completed
and infrastructure systems
Resolve the problem o f saturation e Integrated roadport access plan by 2003
of major road arteries through
improved accessibility for 0 Vehicle loadhoad-use requirements by 2003
outlying and remote population 0 Percent o f nation with access to safe roads
areas 0 Reduced travel time to clinics and schools
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5. Reduce import dependence on oil 0 Improvedbus and public conveyances
by using alternative public
transport and improving vehicle 0 Reduced emissions with new standards for vehicle
energy efficiencies inspection and licensing
6. Provide employment 0 Increasedlocal district & rural staff
opportunities through effective
job development and capacity 0 100% training coverage for all staff in'relevant
buildingprograms technical areas
7. Establish optimal models of 0 Plans and models from regional nations acquired
regulationand technical and compatibility approved
knowledge from established and
comparable land transportation 0 Compliance with international standards for road
systems and traffic safety
8. Implement a nationalpublic 0 100% of populationwith access to public safety
safety program for driving and regulations
maintaining all transport vehicles
by creating driver awareness 0 100%of schools with road safety and driving safety
campaigns programs for relevant youth
0 Public media safety campaign instituted
9. Formulate regulations for traffic 0 Assessment process for accidents and traffic
and vehicular rules governing incidents implemented
safe legal vehicle operation, and
enforcement 0 Reduced accident and traffic incident rates
10. Establish an effective policy for 0 Affordable public transport fees established
transportation fees and
charges, and a retention fund for 0 Rural system for public transport and fees
these revenues 0 Fundestablishedfor retention and roaduse fees,
public transport revenues
FSEA TRANSPORTATION
15.77 The Division of Sea Transportation i s the administrative authority for port, dockside, and
waterway development. With UN support, the war-related damage has been the highest priority,
yet the port authority i s entering this first national planning period with only rudimentary
facilities, a weak legal mandate for regulation o f port and shipping activities, and a slim profile
of experienced technical staff. Port progress has occurred primarily through the Emergency
Infrastructure Rehabilitation Project implemented under TFET funding, and bilateral funding
from Japan.
15.78 Significant rehabilitation work is ongoing to repair existing wharf facilities, extend the
container terminal, pave loading and storage areas, provide security walls, improve expediting
systems, and train select staff members. However, port and sea shipping regulations have not
been prepared, tariffs remain in question, and there are concerns regarding coastal environmental
and port protection, safety, access and traffic patterns o f port container services, and
administration of the Division.
292
Divisionof Sea Transportation Objectives
15.79 The Division has enthusiastic objectives. Some reflect projects and existing activities that
are donor-funded or under bilateral assistance. Others focus on institutional development and
capacity buildingin maritime law and procedure. These objectives are as follows.
To develop a code o f commercial maritime law.
To conclude ratification procedures on behalf of East Timor for principal maritime
conventions on maritime safety and maritime transport.
To achieve ratification on behalf of East Timor o f the United Nations Convention on
the Law of the Sea.
To establish a registry of shipping for East Timor.
To establish a modern system o f port taxes and tariffs with effective enforcement
capabilities that preclude contraband and corruption.
To pursue enactment of the law on public maritime domain in conjunction with the
MEAD,and with the MoJ.
To establish a public passenger sea transport service between Dili and Atauro, and
between Dili and Oecussi.
To create a plan and institute a policy for regulation of national coastal traffic.
To achieve a national capacity for essential survey & inspection procedures, and
thereon, for certifications regarding ship conditions, materials safety, and hazards.
To train and develop East Timorese in special maritime studies abroad.
To improve port container and bulk handling while reducing congestion at Dili.
To provide the facilities and services required to situate the Naval Defence Force at
the Port of Hera in concert with the government's priorities.
To complete current projects and rehabilitation activities on schedule with Japanese
bilateral and multilateral assistance.
To assess and subsequently implement an effective system o f fire prevention and both
port and maritime fire and damage control.
Constraints,Problemsand Issues
15.80 The Division of Sea Transportation faces similar constraints to all other Divisions
conceming inadequate funding and insufficient human resources. There i s an urgent need for
staff recruitment and training to provide the Division with highly skilled technical and maritime
specialists, which are now temporary provided by UNTAET. In addition, the port i s entirely
reliant on private and foreign-owned companies for cargo portage and handling. What access
there i s to domestic equipment i s largely supported through UNTAET assistance. In effect, East
Timor has little cargo support capability. This i s further complicated by limited telephone and
information systems.
293
15.81 The Port o f Dili has basic ship-to-shore communications, but with limited range and
inadequate security. This reflects a general lack of service infrastructure, which includes the lack
of effective port security, fire-fighting capabilities, handing of hazardous materials, and maritime
and port safety procedures.
Division of Sea Transportation Strategies
15.82 The Division will initially concentrate on institutional development creating the
legislative framework for an effective maritime authority. Development of principal port
legislation includes creation of a public institute "Administration of the Ports of East Timor, XI"'
with respective statutes. This must reflect an appropriate administrative structure for the Ports
Authority o f East Timor and Maritime Administration.
15.83 The Division will manage planning, project design, and tendering for competitive private
sector development o f port facilities, coordinate port services, and implement development plans
for expanded port operations, including viable fire fighting and marine rescue operations at Dili,
and expand services to secondary ports. Establishing a Shipping Registry will be critical to port
control.
15.84 Strategic development will occur in phases, first with completion of rehabilitation
projects and bilateral assistance projects. Duringthis early development phase basic port services
at the ports o f Suai and Oecussi will be initiated, followed by those at Caravel and Com.
Development o f regional ports will be linked to the maritime coastal transport system to be
implemented over a period o f four years. Recruitment and capacity building for human resource
maritime skills will be essential for providing new public services, designing development
projects, and administering shipping and commercial sea transport systems, and to replace
UNTAET staff.
Division of Sea Transportation Programs and Projects
15.85 The Division i s concerned with port development and sea transport as projects rather than
programs. Projects are described under program headings for clarity.
Program 1: Institutional Development
15.86 East Timor must develop the legal framework for a port authority with the regulatory
capability of shipping, registry, and inspections. There also i s a requirement for effective
administration and ship-to-shore communications with qualified staff.
Develop a Code o f Commercial Maritime Law
Ratification o f Maritime Conventions on Safety and Transport
Ratification o f United Nations Convention on the Law of the Sea.
Establishment of a Registry o f Shipping
Enactment of Law on Public Maritime Domain
Policy for Regulation of Coastal Traffic
Survey & Inspection Procedures, Certifications on Material Safety and Hazards
Program 2: Port Rehabilitation and Development
15.87 Existing projects focus on rehabilitation under recurrent and bilateral funding. These and
proposedprojects are concerned with rebuilding, security, and facilities.
DiliPort Operations
Container Handling and Storage Enhancement
DiliPortEmergency InfrastructureRehabilitationProject
Japanese Assistance Project for Facilities and Port Improvements Dili
Oecussi Passenger Ferry Operation
Rehabilitationof Secondary Ports
Program 3: Port Services
15.88 Many new services are needed for docking, loading, and expediting, but most are in
planning stages. Several projects for required services are proposed here.
Port Taxes and Tariffs Project
Security Enforcement to Preclude Contraband and Corruption
Port Planning for Strategic Passenger and Cargo Services
Distribution and Land Route Congestion at the Port of Dili
Public passenger sea transport, Dili and Atauro, and Dili and Oecussi
Naval Defence Force at the Port of Hera
Program 4: Capacity Building
14.88 Staff management and technical capabilities are necessary to attain the service levels
required. Several projects are in progress and several are proposed.
Projects
a) Technical Port Management and Maritime Administrative Studies Abroad
b) Staff Training and Development in Safety and Fire Fighting
c) Assistance Programs for Training and Standards on Hazardous Materials, Shipboard
Safety, Inspections, and Disaster Procedures
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Table 15.8: Divisionof Sea TransportPerformanceIndicators
Objectives PerformanceIndicators
1. Develop commercial maritime Code completed by 2003
law
2. Ratification procedures for Ratification achieved by 2003
principal maritime conventions on
maritime safety and maritime Conventions on safety implementedby
transport 2003
3. Ratification of the United Nations Ratification achieved by end of 2002
Convention on the Law of the
Sea. Conventions promulgated by end o f
2002
4. Establish a registry of shipping Registry completed by end of 2002
5. Establish a modern system of port System approved and implementedby
taxes and tariffs with effective end of 2002
enforcement capabilities that
preclude contraband and Enforcement staff and control systems in
corruption place by 2003
6. Enactment of the law on public Joint regulations by end o f 2002
maritime domain in conjunction
with the MOE&P and M O J Enforcement procedures enacted and
Published by 2003
7. Establish passenger sea transport Dilito Atauro service establishedby
service between Dili and Atauro, 2003
and between Dili and Oecussi Dilito Oecussi service establishedby
2003
8. Plan and institute a policy for Plan drafted by end of 2002
regulation of national coastal
traffic Plan for total coastal traffic instituted in
2003
9. Achieve a national capacity for Ship survey & inspection regulations
survey & inspection procedures, passed
and certifications for ship
conditions, materials safety, and Inspection staff recruited or contracted
hazards 2003
Materials safety inspection system 2003
Hazardous handling systems in place
2003
10. Achieve access to proper training 100%of human resources requiredfor
and development for Timorese in technical port operations educated and
special maritime studies abroad certified by 2004
11. Improve port container and bulk 100%of regionalports operational by
handling while reducing 2005
296
congestion problems at the Port of
Dili Diliport congestionresolvedby 2003
0 Container port handlingimprovedby
50%
12. Situate Naval Defence Force at 0 Comply with defence requirements by
Hera 2003
13. Complete current projects and 0 Projects completed on time and inbudget
rehabilitation activities on
schedule with Japanese bilateral 0 90% rehabilitation by 2004, 100% by
and multilateral assistance 2005
0 Land infrastructure at Dili completed
2003
0 Tibar, Hera, Sufi repairs completed 2003
0 Ports o f Com and Oecussi remodelled
2004
14. Assess and implement an 0 Assessment completed by end of 2002
effective system of fire prevention
and both port and maritime fire Port of Dili fire and emergency systems
and damage control to international standards by 2003
0 Secondary fire and emergency systems
2004
15.90 Nine airfields in East Timor were constructed during the Portuguese era, but with no
history of a national air carrier or infrastructure for air hub cargo or maintenance capabilities,
Reconstruction has focused on the Comoro Airport and development of safety operations for
passengers and cargo. Baucau and Suai airports are also under rehabilitation. The Division's
main development objectives in the near-term are to complete rehabilitation and to implement
staff training programs.
15.91 Pacific Architecture Engineering operates two airports outside Dili under the UN in
Baucau and Suai. Airports in Oecussi, Los Palos, Viqueque and Maliana are operated by
UNTAET. An Airport Master Plan is being developed for each airport, and together with the
transition, this will provide a compliance structure for an international standard accounting
system within an East Timor Civil Aviation Authority.
15.92 Legislation i s in draft form on basic Aviation Law and expected to be finalised and
enacted by the end of the year 2002. This will be the foundation for the organisation and
structure of ETCA, which will then be able to maintain an official relationship with International
Civil Aviation Organisation based on compliance with the Civil Aviation International
Convention (Chicago Convention). However, the Division will be dependent on donor assistance
with contracted services until2004.
15.93 The transition to a competent and fully operational East Timor authority will require
three general phases. The first i s the current emphasis on rehabilitation and training. The second
i s concerned with expansion o f facilities and transition toward a certified civil aviation authority.
297
And the thirdis the integrateddevelopment of air transport and cargo capabilities to sustain long-
term growth.
Divisionof Civil Aviation Objectives
15.94 The Division's objectives extend the vision of the Civil Aviation authority, which is to
attain excellence in aeronautical services, establish membership in the ICAO, and provide
quality airports and air services. The Division's strategic objectives are:
To attain a high standard of safe and efficient passenger service.
To establish effective air cargo systems for international and national transport.
To generate a reliable staff with qualifications required to ensure safe and effective
airport operations comparable to the best airport facilities in the region.
To establish the reliable and secure systems needed for an efficient mail and postal
expediting hub and internal nationalpostal support services.
To establish an appropriate financial system that allows the civil aviation
administration to recover its full costs of operation.
To promote and maintain a favourable environment for development with confidence
among the Division staff and throughout the integrated civil aviation structure.
To provide the ground facilities required to support military air and land priorities.
To support national development priorities and poverty reduction initiatives through
indigenous staff recruitment, training, employment, and district services.
Constraints, Problemsand Issues
15.95 The most serious constraint will continue to be the imbalance o f supply and demand of
airport operations. In order to achieve the level of quality and safety envisioned for airports, and
subsequently to achieve the revenue levels required to sustain airport facilities and services, a
"critical mass" i s required for qualified staff and the operational infrastructure. Specifically,
quality and safe service levels cannot be achieved incrementally but must be attained through
substantial capital development.
15.96 There i s a substantial market for air cargo if it can be cost-effective and efficient. There
are no credible facilities for air cargo with scale economies to justify a profitable air cargo
system at present, and the capital development of such a facility i s well beyond funding capacity
over the term of this planning period.
15.97 East Timor must become a cost-effective destination for tourist travel and international
business development. Consequently, the main airport and key regionalairports must achieve the
quality and service efficiencies to support tourism and trade activities. At the same time, airport
development will be significantly dependent on tourism and trade development. Neither can
progress very quickly in isolation.
Divisionof Civil AviationStrategies
15.98 The Division will pursue a three-stage strategy that begins with implementation o f
existing rehabilitation and training projects to achieve the basic operational structure required for
298
a civil aviation system. This will include passage of enabling legislation and drafting the
regulations needed for quality, safety, and financial operations. A system o f airport fees and
appropriate service taxes will be introduced during this stage as the revenue base for operational
cost recovery. The Division will seek bilateral agreements in the area of air transport with
countries in the sub-region with the objective of establishing reciprocal legal arrangements for
national operators.
15.99 The second phrase will be strategic development of district airports, generating the
critical mass for quality and safety needed for passenger and cargo services that can support
internal trade, transport, and postal services. During this stage, it i s anticipated that the Civil
Aviation authority will attain membership in the ICAO and ratify necessary agreements for
regional cooperation in air services.
15.100 The third stage will be an integrated strategy of commercial air services development
with cooperative endeavours that include tourism, trade, business, cargo, and ground support
development. Many of these linkages will be pursued at the outset of this planning period but can
only be realistically initiated when the airport facilities and qualified staff operations have
attained the "critical mass" required to participate.
Division of Civil Aviation Programs and Projects
15.101 Programs are focused on priority issues of Comoro Airport operations, rehabilitation, and
support facilities. The East Timor Civil Aviation Authority i s also concerned with institutional
development as a sustained authority for passenger and cargo services.
Program 1: Institutional Development
15.102Institutional development is concerned with legislative framework for an Aviation Law
and transition from UN operational management to East Timor authorities. In addition, a
structure of fees and assessment must be developed, and East Timor must establish regional and
international relationships for air services.
Projects
a) Enactment o f Aviation Law
b) Organisation and Structural Development for East Timor Civil Aviation Authority
c) Regional Affairs for Air Service and Cargo
d) Membership in the ICAO
e) ICAO Compliance Regulations and Practices
Program 2: ComoroAirport Operations
15.103 This program provides for the safe and efficient operation of Comoro Airport in
accordance with ICAO standards. With the approaching end to the Memorandum of
Understanding, responsibility will shift from UNTAET and the Government o f Portugal to an
East Timor Civil Aviation Authority requiring changes in services, fees, facilities,
administration, and safety.
299
Projects
a) Comoro Runway Overlay Rehabilitation
b) TFET Project 1Comoro Runway Structural Evaluation
c) Bilateral Project 1TrainingBupervising Staff for Comoro
d) Multilateral Civil Aviation Authority assistance for Operations
e) Air Traffic Control, NavigationalLighting, and Communications
f ) Airport Emergency Procedures, Fire FightingFacilities
g) Airport and Customs Security
h) Infrastructure and GroundMaintenance
i) Finance and Administrative Systems Development
Program 3: Improvement of National Services
15.104 A second phase of airport development late in the current planning period will build on
core o f services and capabilities at Comoro. District air services and cargo will continue to be
privately contracted but expanded, including capacity development.
Runway Development and Rehabilitation
Directional Guidance and Navigation Support Systems
Aircraft Maintenance and Support Facilities at Comoro and RegionalAirports
Fees and Tariffs on Cargo and Passenger Services
Air Cargo and PostalFacilities
National Plan for Air Routes and Private Support Facilities
Communications, Air Controller Systems, and Emergency Procedures Systems
Fire Prevention and Fire FightingSystems
Program 4: Capacity Building
15.105 Substantial training and staff development has been taking place through bilateral
projects and UNTAETRTTA activities. Programs for continued training, specifically in highly
technical areas and critical emergency situations, are only now in planning stages. The East
Timor authority has been heavily reliant on donor and international assistance, which will
continue to be necessary.
300
Projects
a) Bilateral Project 1Training & Supervising Staff
b) Air ControllerTraining and Certification
c) Emergency Services and Fire Fighting
d) Administration and Airport Management
e) Ground Maintenance
Table 15.9: Division of Civil Aviation Performance Indicators
Objectives Performance Indicators
1. Attain a highstandard of safe Maintain 100% incident and accident
and efficient passenger service free air and ground operations
Join ICAO by year end 2002
Compliance with ICAO Guidelines by
2003
Civil aviation laws and regulations 100%
enacted and approved by end o f 2003
2. Establish effective air cargo 100%rehabilitation of Dilifacilities by
systems for international and 2005
national transport 90% of cargo facilities renovation by
2002
Create mobile off-loading and conveyer
cargo and passenger systems by 2003
3. Generate a reliable staff with 80% of ground and C A staff recruited
qualifications required to ensure and trained by end o f 2002
safe and effective operations 100% of staff hired and trained by end
2003
4. Establish the reliable and secure With Post Office, establish fully secure
systems needed for efficient and efficient air mail and post by end of
mail & postal expediting 2002
Establishwith Post Office and postal
ministryfees for all postal handling and
shippingby 2003
5. Establish an appropriate System implemented database with
financial system that allows full donor support by 2003
cost recovery of operations Fee structure and budgeted system by
2003
301
Promote a favorable 0 80% of development studies completed
environment for development 2002
with confidence among the
Division staff 0 100% of assessment developments by
2005
100% training for ICAO and Civil
Aviation laws and regulations
Provide ground facilities 0 Compliance with military requirements
required for military air and land as specified and maintained
priorities
Support national development Public promotion and competition for
priorities and poverty reduction main and secondary air service locations
initiatives through staff
recruitment, training, 0 Private contractor requirements for
employment, and air-assisted capable local hiring and training
district services 0 Coordinated support program for air
service to rural airports and access to
population
15.106 Telecommunications represents a part of the Division o f Telecommunications and Post,
and i s treated here as a sub-sector (postal services are treated separately below). Like most
ground-based telephonic communication systems, there are five components to manage:
buildings and exchange facilities; technical operating systems; external transmission networks
including towers, wires, and reception equipment; installation and maintenance equipment; and
administrative services. The existing system began post-1999 with 60-to-90 percent of all
physical telecommunications infrastructure severely damaged or destroyed; less than 10 percent
was maintained well enough to be put into service with severe staff shortages.
15.107 Today public services are provided through an Australian telecommunications company
under a short-term contract subject to renewal. Most telephone services are mobile, although a
limited land line network has been installed. UNTAET maintains its own stand-alone system
that may be withdrawn as the UN mandate expires. The main challenge facing the
telecommunications sector i s to provide basic services to all districts and thereby ensure realistic
access to telecommunications for all citizens.
TelecommunicationsObjectives
15.108 Although early transition efforts have focused on rehabilitation projects, the extent of
damage often has meant starting from scratch to rebuild capacity with the communications
support needed for the country to operate at a very basic level. Attention will now be directed
toward legislative initiatives, investments, and expanded operations, which reflect the main
objectives for the planning period. These are:
a) To complete ongoing restoration projects of telecommunications infrastructure and
culminate the transition training and development programs.
302
To initiate currently planned projects for controlling radio frequency electro-magnetic
emissions in the country and other functions of the Communications Regulatory
Authority.
To attain by mid-2003 the implementation of a telecommunications network with the
capacity to satisfy the minimumtelecommunication needs of the nation.
To extend basic telecommunication services to all districts by the end of 2004.
To promote the formation a sufficient number of Internet Service Providers to
realistically serve all of East Timor by the end of 2002.
To create a regulatory and fiscal authority, the Communications Regulatory Authority
for control of radio frequency electro-magnetic emissions and standards.
To build capacity to the level of self-sufficient management and technical operational
control by the end of 2003.
To complete legislative guidelines and operating standards for telecommunications by
the end of 2002, and to obtain approval for nationalimplementation thereon.
To pursue capacity building and recruitment programs that ensure the sector has well-
qualified staff in telecommunications and information technology.
To institute a supervisory and coordination process for district operators and service
technicians.
Constraints, Problems and Issues
15.109 Telecommunications is a capital-intensive industry and will require high levels o f
investment to finance the development of infrastructure. As with other sectors, the sector faces
human resource shortages and attention to capacity development. Perhaps the most important
consideration i s the topology of East Timor that poses major constraints on land-based tower-
and-wire development.
15.110 Under current operating constraints and the realities of funding, staff capabilities, and
potential support from international donors, incremental development of land-based wire
telephone systems and current-generation PABX systems may be the only option. This should
not prevent the sector (and the donor community) from considering the cost-benefit trade-off of
pursuingthe latest technological systems.
Telecommunications Strategies
15.111 The highest priority after current rehabilitation projects are completed i s to establish the
legislative framework for regulating telecommunications. The Division will pursue laws and
operating regulations to become an autonomous agency in terms of self-financing, and in the
long-term, create an impact fund capital development.
15.112 The sector can achieve its objectives best through a BOT contract with an experienced
major private international company. This would entail contracting with government backing
with a 20-25 year amortisation and BOT completion horizon. This would permit state-of-the-art
telecommunications development from the start o f the contract, consistent and thorough training
of local technicians and administrative staff, and a full transparent telecommunication system
with rapid capital development. Under the BOT contractor, optimal use of local human and
303
material resources would be realised with a final "handing over of keys" to an already-competent
staff, This strategic approach would fully meet the component parts of a domestic strategy that
would address all five aspects of telecommunications.
15.113 If a BOT strategy cannot be implemented, the Division must plan independent programs
for each of the five components - buildingsand exchange facilities, operational systems, external
network infrastructure, equipment and maintenance, and staff capabilities. The Division will
address these components within its programs.
Telecommunications Programs and Projects
15.114 The directorate has several program areas but few individually identified projects apart
from overall operations. Two priorities stand out. The first i s concerned with establishing the
regulatory authority. The second i s concerned with maintaining appropriate operational contracts
untilgovernment can negotiate a major investment for private telecommunications development
through a build-operate-transfer process.
Program 1: Regulation
15.115 The Communications Regulatory Authority will be fully established and empowered as
the government regulator of all communications services in East Timor.
Projects
a) Public and Private Policy Development
b) Radio Frequency Electro-MagneticEmissions and Standards
c) Regulations Pertainingto Post and Internet
Program 2: TelecommunicationsOperations
15.116 The rehabilitation of national services will continue with systematic transition of assets
and infrastructure services from UNTAET as East Timor progresses.
Projects
a) Rehabilitation of Towers, Lines and Exchanges
b) Capital Upgrade of Equipment and PABX
c) Provision of Customer Service Centre
d) Maintenance of Facilities and Transmission Distribution Systems
Program 3: Capacio Building
Projects
a) Recruitment and Staff Training in Administrative Services
b) District Operations Training and Staffing o f Exchanges
c) Maintenance Workshops and Skills Development
304
Table15.10: TelecommunicationsPerformanceIndicators
Objectives PerformanceIndicators
I. Complete ongoing restoration 100% restoration of Dili infrastructure by 2003
projects and culminate transition
training and development 50% of service to rural areas complete in 2003
programs 100% of training initiatives completed by 2003
2. Initiate controls for radio e 100% completed projects by 2003
frequency electro-magnetic
emissions
3. Implement a telecommunications Network implemented by July 2003
network with the capacity to
satisfy the minimum Network districts and populated areas by 2004
telecommunication needs o f the Install75% o f planned public telephone booths in
nation capital by 2002, 100% by end o f 2003
e 100%of rural telephone booths end of 2004
4. Extend basic telecommunication e Expansion of basic telecommunications services to all
services to all districts by 2004 districts by end of 2004
5. Promote sufficient Internet e Target coverage of all subscribers by 2004
Service Providers to serve all of
East Timor
6. Create a regulatory and fiscal e Enabled and operational by end o f 2002
authority, the Communications
Regulatory Authority (CRA)
7. Buildcapacity to the level o f self- e Complete all Dili/district staff training by 2004
management, operational control e Qualified maintenance staff recruited by 2004
8. Complete legislative guidelines e Complete slate of regulations by end of 2002
and operating standards e Draft regulations for operation standards 2002
9. Pursue capacity building and e Sector staff can meet self-sufficiency in information
recruitment programs technology and telecom technical advancements
10. Institute a supervisory and e Implementedin district capitals by end of 2002
coordination process for districts e 100% of urbadrural areas participate by 2003
15.117 Postal services are currently operating in eight districts following early transition
support for reconstruction and bilateral assistant from Portugal. The remaining districts are
serviced by roadthrough infrequent routes by existing staff. A large part of the population has no
305
easy access to postal services, nor can they afford to use mail services. In Oecussi, an agency
operates mail service in a UNTAET building, and the UN has supported airmail and
government-related postal services.
15.118 Although governmental approval has been given for expanded district services, the
regulations needed for postal services administration have not yet been developed. This plan i s
an early step to generate comprehensive postal services with enabling postal policies that provide
efficient and affordable services to everyone.
PostalServices Objectives
Repair the postal infrastructure to provide basic postal services within the current
program framework for rehabilitation.
Recruit, train and enable postal staff to be able to offer high quality services currently
being developed and planned for long-term expansion.
Increase the quality of postal service coverage, extending the range of service to
communities that have not yet been incorporated to the postal map.
Create community agencies with the objective of delivering to all a range o f general
services. These will be public-funded activities under the postal authority.
Establish "peoples stores" as private, fee-based services in rural areas to provide
postal contract systems coordinated with public works and other agencies for mail
transactions, banking networks, and various forms of transfer payments.
Inthe long term, pursue a postal financial intermediation process, and if approved and
consistent with banking laws yet to be developed, provide various cash and demand
accounts, payment capability, and certain approved lending.
Initiate professional training and development to enhance human resource capacity
among postal officers.
Pursue alternatives for postal administration, including scenario plans for a fully
private, quasi-governmental, and fully public postal service.
Constraints, Problemsand Issues
15.119 The major constraints are those that face all other sectors, namely lack of funding to
generate the capital improvements required for a national postal service, and insufficient human
resources capable of administering the postal service or operating the district services. Virtually
all other limitations stem from these two situations, including lack of equipment, unreliable
service, poor (or no) access for much of the rural population, and the inability to support other
government functions.
15.120 In the near term, and perhaps well into the future, development costs and the operating
costs o f maintaining district offices with decent access to postal services will far exceed
revenues. A regime of rates must be competitive on an international scale, yet also be
domestically modest so that a vast majority o f citizens can afford to use the mail as its means of
communicationand various transactions.
306
Postal Services Strategies
15.121 Because postal services were nearly totally destroyed, it i s necessary to gradually
develop new services throughout the country. The strategy will be incremental development as
the Division continues as a public postal authority. However, the Division will study alternatives
for private postal services or a quasi-governmental agency through joint-contractual agreements.
15.122 The first phase o f development will be carried out with the support and financing of
CTT-Correios of Portugal, allowing the re-establishment of postal flows and the creation of
postal centres in Dili, Baucau, and Oecussi. During this stage (through 2003), a central national
postal sorting and forwarding office will be established. During phase two (through 2007), the
challenge will be to widen postal services, branching out from the district capitals to realistically
provide access to all areas of the population. Access will still be limited for many rural
households, but the aim i s to at least provide access through small agencies or private service
points.
15.123 Clearly, a priority will be to develop proposals for bilateral or multilateral assistance
with essential capital improvements and with capacity development and human resources. In
addition, the Division will seek technical assistance to develop planning scenarios for
privatisation of postal services or a quasi-government agency.
Postal Services Programs and Projects
15.124 The Postal sector has three program areas, each with several projects that require
resources and support activities throughout the five-year planning cycle. The ultimate aim of the
programs is to restore 90 percent of the infrastructure and be able to provide the full range of
postal communications services required, with realistic access to all populated areas, by the end
of the planningperiod.
Program 1: Restoration and Development
Projects
a) Renovation of District Capital Offices
b) Restoration o f Central General Post Office in Dili
c) Installation o f Street Post Boxes in Urban Centres
d) Initiation o f Mail Pick Up and Delivery
e) Mobile Post Office Program
Program 2: Human Resource Capacity
Projects
a) Recruitment for Public Service Staffing
b) Training o f District Staff and Delivery Personnel
c) Contracting Private Rural Carriers and Access Services
307
Program 3: Innovations and Expansion
Projects
a) Postage Stamp Printingand Distribution
b) Vehicle Acquisitions for Rural Services
c) Electronic Service Centres
d) Establish Postal Banking Services
Table 15.11: Postal Service Performance Indicators
Objectives Performance Indicators
1, Repair the postal infrastructure to 0 30% completed by end of 2002
provide basic postal services
0 70% completed by end of 2003
0 100%completed by end of 2005
2. Recruit, train and enable postal staff 0 30% staffing level achieved end of 2002
to be able to offer highquality
services 0 70% recruited and trained by end of 2003
0 100%human resource competency and staffing
level by end of 2005
3. Increase the quality of postal service 0 General Post Office and district offices with
coverage, extending services to electronic counter services by end of 2003
communities that have not yet been
incorporated to the postal map 0 Rural postage and counter service coverage
90% by end of 2003
0 Street post boxes installed in Dili, 2003
0 District capital street post boxes by 2003
0 Mobile Post Van services by end of 2002
0 Rural home or core point delivery and pick-up
initiated in 2003
0 Urban route pick up and delivery 100%by end
of 2003
4. Create community agencies with a 50% of all regionaloffices or kiosks operated
range of general services for suburbs under public service staff by end of 2003
and districts 50% o f mobile services by adjunct staff
contracts
5. Establish "peoples stores" as private 0 50% o f rural postal services inprivate
sector, fee-based services for rural enterprise stores with extended fax, phone,
areas copy, and other services plus postal
308
Create a postal financial 0 Legal mandate achieved by end of 2002
intermediation process consistent with
banking laws to provide various cash 50% of banking or extended services offered by
and demand accounts, payment end of 2003
capability, and certain approved 0 100%coverage in sector post offices by end of
lending 2005
Ensure professional training and 0 Annual participation problems with 100%
development to enhance human attendance by all staff in training
resource capacity among postal
officers. 0 Special course/workshops supervision and
management for all eligible, 100% annual
.
Pursue alternatives for postal 0 Draft business plan for privatisation or quasi-
administration, including a fully
- public administration by end o f 2002
private, quasi-governmental, and fully
public postal service Proposal approved for implementation in 2003
FMETEOROLOG
15.125 The meteorological sector i s in the process o f being completely rebuilt as virtually all
material infrastructure and instrumentation that existed prior to 1999was destroyed. Current staff
members were never part of the previous technical or administration cadre. In effect,
meteorology i s a new ground-up Division, and it has defined its responsibilities and core
functions of the directorate as follows.
a) Providing advice to the Government on climatic conditions and forecasts.
b) Monitoring weather and seismographic data for advance alerts of hazards.
c) Providing atmospheric information and forecasts for road transport, the armed forces,
agriculturalists, and public dissemination.
d) Providingtimely alerts to the nation of potentialnatural disasters.
Division of Meteorology Objectives
15.126 As an extension of the sector vision, the Division of Meteorology will ensure adequate
services for weather forecasting and seismology throughout the country utilising advanced
technology and methods that will guarantee precision and quality in forecasting comparable to
developed countries of the region. Primary objectives are as follows.
a) To maintain and develop the national network of meteorological and seismological
monitoring and warning systems.
b) To ensure study and training by Division technical and scientific staff at national and
international levels in the areas o f meteorology and seismology.
c) To assure timely and accurate delivery of services in the areas of meteorology and
seismology to all government agencies.
309
To implement a system of information for relevant conditions in East Timor that can
be transmitted to international counterparts.
To develop international relations and cooperation in the areas of meteorology and
seismology to better inform East Timor of relevant conditions within the region.
To develop the appropriate physical means of monitoring and communicating
information on meteorological conditions (targeted for end of plan-year 2003).
To establish the human resource capabilities for using instruments and monitoring
systems for meteorology and seismology (targeted for end of plan-year 2003).
To attain the necessary level of management and administration for the Division
through recruitment and training (by year-end 2002).
To define programs and procedures for technical assessments and monitoring, thus
establishing the systems for forecasting and analyses (by year-end 2002).
To complete a network o f observation and warning stations with operational services
required for national meteorology service (by year-end 2004).
To establish the means of collaboration with environmental constituents to monitor
climatic changes vital to the protection of the natural environment.
Constraints, Problems and Issues
15.127 With total destruction of the infrastructure and destruction of all meteorological
instruments, the capital funding requirements are exceptional. Lack of skilled staff and both
scientific and technical expertise will impede progress toward achieving the Division's
objectives. Without adequate systems or procedural policies, East Timor i s fully dependent on
other countries for weather forecasts, which provide no emergency alert capabilities.
Communication systems in East Timor cannot be adequately employed for alerts or weather
transmission to government agencies, military, district or rural areas, or the public at large.
Without having a credible level o f monitoring and forecasting, East Timor cannot be part of a
larger reciprocal regional network o f such services, thus remaining hostage to whatever climatic
conditions occur.
Division of Meteorology Strategies
15.128 The strategy o f the Division has two main thrusts. The first i s to simply build (from
scratch or by rehabilitating what can be redeemed) the meteorological infrastructure o f basic
observation, monitoring, and information forecasting networks. This will have an early stage
(completed by 2004), and a latter stage of national expansion of observation points and services
(extending through the planning period and beyond). This i s largely a "capital development"
component but will be mirrored by a capability building effort to recruit and train Division staff
and local technicians.
15.129 The second component concerns pervasive activities that begin now and will extend
throughout the planning period. This includes regulatory planning and Division structuring of
communications, emergency procedures, and rapid-response alert systems. These systems and
networks will define the scientific and technical staffing patterns that evolve over the next few
years.
310
15.130 Neither component to the strategy i s feasible without first having approval through
enacted laws and regulations for a national meteorological service, and the support for recurrent
operating budgets. The Division's director general will subsequently be responsible for securing
these enabling approvals and budgets while providing administrative oversight to the proposed
strategic initiatives.
15.131 It i s safe to assume that capital assets and technical expertise required are not in East
Timor, not can they be attained without international assistance. Therefore, the Division will
organise a round table meeting with a view to obtaining international support for the
development of the sector following approval o f this development plan. The Division will seek
direct technical assistance for both development and operations over the course o f the planning
period, sufficient to ensure membership in the World Meteorological Organisation, and to
sustain a high level o f quality services.
Division of Meteorology Programs and Projects
15.132 Building the service from the ground up requires attention to three program areas, but
no specific projects beyond implementingthe programs summarised below.
Program 1: OperationalInfrastructure
15.133 The combined efforts of construction and equipment installation will proceed to achieve
a basic capacity for all services by the end of 2002, and be fully functional by the end of 2004.
Expansion will then target district stations and equipment. Part o f this program will be to identify
policies required for emergency procedures, alerts, and communications concerning all
meteorology and seismology circumstances. Instrumentation must be obtained through
international assistance and installed and maintained under international certification standards.
Program 2: Capacity Building
15.134 Concurrent with infrastructure development and equipment installation, local staff will
be recruited and trained to achieve 50 percent of targeted capabilities by the end of 2002 and
fully competent skilled staff by the end of 2004. External technical assistance through donor
programs i s assumed to be needed for higher level technical and scientific positions, thus
complementing local staff with the service levels required for forecasting, international
cooperation, and developing emergency alert systems.
Table 15.12: Division of Meteorology Performance Indicators
Objectives Performance Indicators
1. Develop a national network of 50% rehabilitated stations by 2002
meteorological and seismological
monitoring and warning systems 0 100% of new construction by end o f 2004
2. Ensure study and training by Division 0 25% of selected technical and scientific staff
technical and scientific staff at national recruited or trained by end of 2002
and international levels
0 100%staff credentialed by year end 2004
3. Assure timely and accurate delivery of 0 100% forecasts and communication of weather
services in the areas of meteorology or other information delivered within time o f
and seismology to all government InternationalMeteorology Standards
agencies
311
0 Demonstrated accuracy within International
Meteorology Standards
4. Implement a system of information for 0 B y year-end 2003, reliable telephonic linkage
conditions inEast Timor for with instrument data to international agencies
international counterparts with reciprocal networks
5. Develop international relations and 0 Coordinated air and sea weather services on
cooperation inthe areas of meteorology climatic conditions by end of 2003
and seismology
0 Subscription to international weather and
climatic networks by end of 2002
6. Establish the human resource 0 80% local operational control by 2004, 100%
capabilities for usinginstruments and by end of 2005 for instrumentation forecasting
monitoring systems and scientific monitoring
7. Attain levels for management and 0 100% staffed with administrative capabilities
administration for the Division through by end of 2002 in main centre operations
recruitment and training
0 100% indistricVrura1stations by end 2004
8. Define programs and procedures for 0 Strategic plan defined in 2002 for scientific lab
technical assessments and monitoring and database research
0 Scientific capability in staff by 2004
9. Complete development of a network of 0 Subsidiary stations for emergency disaster
observation and warning stations information, national alert system by 2004
I O . Establish a public information system Specialisedtourist services by 2003
that supports agriculture, tourism,
aeronautical, marine, military, and 0 Climatic and seismology data for farmers and
other requirements herders 2003
0 Weathedalert system for military by 2003
11. Establish the means of collaboration 0 Joint weather and seismology assessment
with environmental constituents to procedures with environmental agency by 2003
monitor climatic changes
312
THEROADMAP
(for the Implementationof NDPPrograms)
FinalDraft
+4 f l L;;f
Republica Democrlitica de Timor-Leste
Dili,15April 2003
Timor-Leste Road Map Final Draft, 15 April 2003
Page 2 of 33
Timor-Leste Road Map Final Draft. 15 April 2003
THE ROAD MAP ........................................................................................................ ?
INTRODUCTION .......................................................................................................................................... 5
PART ONE ................................................................................................................. 5
A. The PlanningProcess: Progress Thus Far ............................................................................................ 5
B. PreliminaryResults of Plan Monitoring ............................................................................................... 7
C. Lessonsfrom Plan Implementation:PlanningGaps andthe Needto Prioritise .............i:...................8
D. Immediate Priorities and Stability program ......................................................................................... 9
E. Prioritizationand Sequencing ............................................................................................................. 10
F. ProcessDimensionsof Prioritisationand Sequencing ........................................................................ 11
G. Structural Constraints ........................................................................................................................ 11
H. FinancialConstraints:Budget Parameters ......................................................................................... 12
I TheMillenniumDevelopmentGoals
. .................................................................................................. 13
J. The RoadMap ..................................................................................................................................... 13
K . NDP. Stability ProgramandRoad Map ............................................................................................. 14
PART TWO .............................................................................................................. 16
A . Ministryof Agriculture.Forestry andFisheries ................................................................................. 16
B. Ministryof Developmentand Environment ....................................................................................... 17
C . Ministryof Education.Youth. Culture andSport .............................................................................. 18
D . Ministry of ForeignAffairs and Cooperation ..................................................................................... 20
E. MinistryofHealth ............................................................................................................................... 21
F. Ministry of Interior and State Administration ................................................................................... 22
G . MinistryofJustice ............................................................................................................................... 24
H . Ministry of Planningand Finance ...................................................................................................... 25
I MinistryofTransportation.Communications.andPublicWorks
. .................................................... 27
J. Secretary of State for Defence ............................................................................................................. 28
K . Secretary ofState for Labour and Solidarity ..................................................................................... 28
L . Secretary of State for Commerce and Industry .................................................................................. 29
M The Officeofthe President
. ................................................................................................................. 30
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Timor-Leste Road Map Final Draft. 15 April 2003
N. The National Parliament .................................................................................................................... 30
0 State National Security Service
. ........................................................................................................... 31
P
. Government Structures ....................................................................................................................... 31
Q. The Oecussi Enclave ............................................................................................................................ 32
CONCLUSION ......................................................................................................... 33
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Timor-Leste Road Map Final Draft, 15 April 2003
INTRODUCTION
Timor-Leste has prepared its first five-year National Development Plan (NDP) in record
time. Implementation o f the Plan began on 01 July 2002 with the FY03 budget.' Early on, the
Government recognised the need to prioritise and sequence the NDP activities and prepare a
"Road Map" to guide their implementation. Also, the requirement to fill some o f the gaps in
the Plan and address the urgent needs o f the people through expansion and improvements in
services delivery became evident.
This paper on the "Road Map" summarises the results o f the Prioritisation and Sequencing
exercise and the conclusions. It explains why and how the prioritisation and sequencing has
been undertaken and what the main issues influencing the process were.
The paper is divided into two parts. The first part (Part One) covers the planning background
and performance, rationale for prioritisation and sequencing and the process dimensions,
while Part Two summarises the results o f the submissions by ministriesand agencies.
PARTONE
A. The PlannlngProcess: ProgressThus Far
Prior to independence on 20 M a y 2002, Timor-Leste's Second Transitional Government
began to formulate the country's first National Development Plan (NDP). Eight Ministerial
Working Groups in areas such as poverty reduction and rural and regional development,
human development, agriculture and infrastructure prepared the Plan. They drew upon the
results o f the Countrywide Consultation, in which more than 38,000 citizens from all walks
o f life spread in all parts o f the country were asked to express their vision for the country to
the year 2020 and identify their priorities and development needs. The Working Groups
recognized that the people o f Timor-Leste needed virtually everything and incorporated a
wide range o f strategies, policies, programs and actions to address their needs during the five-
year Plan period (2002103 to 2006107)within a twenty-year perspective.
The Plan incorporates the vision (see Box 1) and set o f inter-related development goals and
priorities o f the people o f Timor-Leste, and specified a number o f strategies, policies, laws,
regulations, programs, projects and activities. It also highlights the key constraints on the
attainment o f these goals and vision, and provides performance indicators through which
progress can be assessed. The Plan was finalized in early M a y 2002 and adopted by the
Parliament after independence.
Since its formulation, the N D P has become the basis for the country's national development
and budgeting process. At the recent semi-annual Meetings with Development Partners, in
M a y and December 2002, representatives o f all external Partners (bilateral and multilateral
donors, UNagencies and others) commented favourably on the N D P as the basis for Timor-
Leste's development.
' FY03refers to the fiscal year beginningon 01 July 2002 and ending on 30 June 2003.
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fimor-Leste Road Map Final Draft, 15 April 2003
-LESTE:VISION2
eration, in the year 202
-Late willbe a demo
*Timor-Leste's Vision is taken from the introductionto the N
National Parliament as the basis for the nation's development.
The Plan gave hope to the people about their future as well as that o f their children and raised
expectations. It recognized the likely direct and indirect adverse impacts o f the reduction of
the international presence due to the scale-down o f the UN operations in mid-2002 on the
demand for goods and services and employment. The unemployment rate was estimated to be
o f the order o f about 17%. The economy was estimated to contract by about 4.8% in 2002
and 6.8% in2003 and recover somewhat (by 3.5%) in2004.2
As the next step inthe planning process, the Council o fMinisters requestedthat all ministries
prepare and submit Annual Action Plans (AAPs)and Quarterly Reporting Matrices (QRMs)
for their Programs and Projects, for the first year o f Plan implementation. The aim o f this
exercise was to link the programs in the Annual Budget for FY033with the goals and
objectives o f the NDP.
To prepare the ministries for drafting their A A P s and QFWs, staff from the Planning and
External Assistance Management Division (PEAMD) and the Budget Division (BD) o f MPF,
together with external facilitators and trainers providedworkshop sessions inJuly and August
200L4 These workshops introduced the formats for A A P s and QRMs, and advised lead
officials and focal persons in the ministries on the provision o f the necessary material and
data required for their completion.
DuringAugust and September 2002, PEAMD consultants and staff worked intensively with
Ministry focal persons on their AAPs and QRMs, providing written recommendations for
improvements. Individual assistance was given to ministries, with consultants spending time
* All rates innominal terms. The Budget Paper for FY03 (April 2002) indicates the GDP inreal terms to decline
by 0.5% in calendar 2002 and 2% in calendar 2003, but recover (increase) by 1.2% in 2004, and continue to
?ow at 3.3% and 5.1% respectively during calendar 2005 and 2006.
FY03 refers to the fiscal year beginning on 01 July 2002 and ending on 30 June 2003.
UNDP, UNICEFand the World Bank funded the facilitators and trainers.
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Timor-LesteRoad Map Final Draft, 15April 2003
on areas such as performance targets. Additional workshops were held in September,
focusing in particular on outputs, benchmarks and indicators. Reports from these sessions
indicated a high degree o f involvement by Ministry officials, and progress in building
capacity withinministries for the drafting o f future programs.
Following this training, ministries submitted completed A A P s and QRMs to PEAMD. Staff
in PEAMD, working with international consultants, then assessed these documents.
Comments and recommendations were provided to Ministry focal persons, who then
undertook revisions, which were finalized and submitted to the Council o f Ministers.
B. PrellmlnaryResultsof Plan Monltorlng
Based on the reporting system developed through the use o f AAPs and QRMs, the
Government, through PEAMD, M P F and individual ministries, has been able to monitor plan
implementation duringthe first six months o f the first year o f NDP. Some 742 activities were
monitored o f which 44 actions were included in the Transition Support Program'. The results
o f the first five months o f this monitoring were presented to the December 2002 Meeting
with Development Partners.
Insummary, monitoring indicated that there had been some early successes in a number of
sectors. Ineducation, for example, primary school enrolments increased, particularly for girls,
and for the poorest groups in the villages. In health, targets for restoring the public health
network and drafting a national health policy framework were met. In agriculture, programs
were set in place to increase crop cultivation, and to meet the particular needs o f the poorer
upland areas, especially inthe center o f the country. In infrastructure, a comprehensive set o f
programs was initiated, in areas such as water supply and sanitation, roads, bridges, and flood
control. Additionally, the Government developed a range o f new programs, notably for
improved governance.
Given Timor-Leste's conditions, however, it rapidly became apparent that there were crucial
constraints on development. For example, the Government inherited a power sector that was
technologically inadequate, with no serious means for cost recovery. A judicial system had to
be built, virtually from nothing. Capacity buildingthrough the funding o f advisers to provide
expertise to crucial posts in govemment and public service developed very slowly6. In several
areas, budgets were under-spent due to limited capacity and the somewhat complex
procurement and other regulations.
These developments should be seen in the context o f the transfer o f governance from the
United Nations Transitional Administration in East Timor (UNTAET) to the National
Government inM a y 2002, and the withdrawal o f the substantial administrative, technical and
other support provided by UNTAET to the Government. Recruitment o f international
advisers for the 100 stability positions and the 200 development positions to augment the
capacity o f the Timorese staff was slow at best. Thus, by 01 July 2002, only about a third o f
the 100 stability positions were filled largely through continuation o f some international
advisers that served under UNTAET. The progress was less encouraging on securing the
resources and filling the 200 development positions.
The Transition Support Program (TSP) is a three-year budgetary support program, in which the Govemment
undertakes to monitor a set o f activities, particularly in relation to areas o f poverty reduction and govemance.
For a detailed assessment of the first five months o fNDP implementation, see the Background Paper prepared
for the December 2002 Timor Leste and Development Partners Meeting, available from PEAMD, MPF.
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Timor-Leste Road Map Final Draft, 15 April 2003
Assisted by the Brettonwoods institutions (IMF and World Bank), Timor-Leste adopted a
Twenty-first Century fiscal system with checks and controls that would ensure transparency
and accountability, especially in such areas as procurement. While this is commendable, the
system has been beyond the capacity o f the Timorese officials and required the retention o f
international advisers in some line management positions in MPF. Support to line ministries
and agencies in such areas as procurement (e.g. explaining the procurement guidelines,
assistance including providing necessary information on `specifications" for such items as
equipment and supplies and in tendering and tender evaluation) proved inadequate, although
some international advisers were provided inthese areas.
Notwithstanding, the Timorese officials, most o f whom lacked any experience in governance,
did manage to get the government machinery moving and began to implement the Plan. The
performance during the first eight months o f FY03, measured in terms o f budget execution,
albeit lower than the pro-rata target, i s encouraging. In fact, budget execution during FYOl
and FY02 under UNTAET was also lower than expected. Overall budget execution by the
National Government in the first eight months was about 56% as compared to a pro-rata
target o f 67%. This i s commendable for a nascent Govemment facing significant capacity
problems and other constraints.
C. Lessonsfrom Pianimplementation: PlanningGapsandthe Needto Priorltlse
Government ministriesand agencies drew up their Annual Action Plans (AAPs) for the first
year o f implementation o f the Plan. Duringthe preparation o f the AAPs, it became clear that
some activities specified in the N D P either did not indicate or there was some ambiguity
about which division or agency was to be responsible for implementing the activities (e.g.
regional development, rural development, job creation, developing Tetun and introducing
Portuguese language), while in other cases, some divisions and agencies established did not
have activities specified for them in the NDP (e.g. for some Divisions in the Ministry o f
Justice and the Timor Sea Office). In mid-January 2003, the Council o f Ministers reviewed
the sector chapters o f the N D P in general and the chapters on "Political Development,
Foreign Relations, Defence and Security" and "Poverty Reduction and Rural and Regional
Development" in particular, and assigned responsibility for implementation o f the activities
to specific ministries and agencies.
Implementing the N D P during the first six months also made it clear that there were
important gaps in programs and activities, notably in areas such as water resources,
infrastructure development, literacy, and technical and vocational education. While capacity
buildingincluding the establishment and/or strengthening o f government institutions and civil
servants received considerable attention, delivery o f services to the people was lagging.
Also, employment, especially in the urban areas and among youth, declined precipitously in
the latter half o f 2002 after withdrawal o f a significant proportion o f the UN personnel. The
country i s facing difficulties in attracting foreign direct investment, and in rapidly creating an
enabling environment for private sector development. Also, the Government has not yet been
able to address adequately the provision o f social services for vulnerable groups. In general,
delivery o f services has not expanded to meet the high expectations o f the people due to
various factors that included (i)capacity limitations and technical difficulties in putting in
place the necessary legislation and regulations supporting good governance, (ii)time
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Timor-Leste Road Map Final Draft, 15 April 2003
absorbed in setting up the administrative and service delivery systems, and (iii)lack o f
prioritizationand sequencing o f the activities inthe NDP.
Early on, the Government realized some o f the constraints and began in October 2002 to see
the need to refocus the development efforts on a limited number o f priority activities. The
events o f 4 December 2002 added urgency to address the immediate needs o f the people
through tangible delivery o f goods and services that are visible to the people.
D. lmmedlatePrlorltlesandStabllltyprogram
In the semi-annual meeting with Development Partners in December 2002, the Prime
Minister alluded to the need to address the urgent needs o f the people and indicated the types
o f priorities around which the Government intended to focus its efforts in the short-term. In
January 2003, the Council o f Ministers refined the immediate priorities taking into account
the feedback from the people in both the urban and rural areas. A tentative list o f immediate
priorities was shared with Development Partners in a meeting on 21 January 2002. The
suggestions emerging from the Partners were taken into account in finalizing the immediate
priorities, which were approved by the Council o f Ministers on 22 January 2003.
Elaborating on the immediate priorities, and in consultation with key Ministers and other
stakeholders, the Stability Program was developed and presented in a document
accompanying the Road Map, focusing on specific areas to be taken into account in program
prioritisation. This was intended to ensure focus by the ministries o n immediate
improvements in service delivery to the people for poverty reduction and rejuvenation o f the
economy. The specific immediate priority areas include:
a. The Governance area where the Government aims to:
? Strengthen the administrative structures o f the State and legitimise the local
authorities beginning with the election o f Chefes de Suco so as to enable them to
address local priorities;
? Strengthen the justice system including both formal and customary systems aiming at
improving the provision o fjudicial services, through increasing the number o fjurists,
and enhancing the quality and delivery o f services including provision o f adequate
legal assistance;
? Strengthen the capacities o f security involving support to the Timor-Leste Police
Force (PNTL) and Defence Force (FDTL) as well as mobilising and organising the
local communities for self-defence;
b. Inthe Stability area, the Government aims to:
? Encourage j o b creation - especially for youth and veterans. This would include
expansion o f vocational training in general and in particular to promote integration o f
the disabled people inthe development process. Further, it would involve formulating
a national policy on employment linking relevant ministries and public and private
investments;
c. Inthe Development area, the Government aims to:
? Support the development o f the agriculture sector, ensuring food security and
enhancing access to markets through the
o Family (farming) sector
o Cooperative sector
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Timor-LesteRoad Map Final Draft, 15 April 2003
o Private sector, and inparticular small and medium enterprises
o Private sector with the state's participation such as throughjoint ventures;
? Develop trade through cooperatives and private sector via
o Promotion o f domestic trade
o Import o fbasic products, and
o Export o f local products such as cumin and copra;
? Improve educational access, particularly to primary education, in both public and
other schools as well as requiring higher quality inall levels o f education; and
? Promote health through extension o f the mobile clinics and delivery o f services to the
remote areas through the implementation o f the public health system.
Inprioritization and sequencing, ministrieshadbeenasked to take into account the immediate
priorities approved by the Council o f Ministers on 22 January 2003. Further, in assessing
their programs, ministries were requested to ensure that criteria for incorporation o f the
programs included:
? Addressing at least one o f the immediate priority areas ingovernance, stability and/or
development; and
? Generating tangible benefits through improved delivery o f services.
Additionally, ministries were reminded o f their continuing overall objectives to:
? Justify their programs in relation to mediumand long-term N D P priorities;
? Promote sustainability - both fiscally and indevelopment terms; and
? Pursue strategies for poverty reduction and economic growth.
E. PrlorltlzatlonandSequenclng
Duringthe first quarter o f calendar 2003, the Government has embarked on a process o f
readjustment in N D P implementation. The process drew upon the experiences in
implementing programs inthe first half o f the first year o f the NDP. Also, it took into account
the imperatives to deliver urgently needed services to the people as indicated by the
immediate priorities. The process entailed prioritization and sequencing o f the development
programs for the remaining four years o f the Plan period (FY04 to FY07). This has involved
both the Council o f Ministers and individual ministries. It included ranking o f the programs
in order o f priority, and planning the sequenced introduction and implementation o f these
programs. Ministries have examined their programs and identified actions that could
contribute tangible results, in terms o f meeting requirements o f the immediate priorities, and
filling gaps inexisting service provision.
Inthe prioritisation of their programs for the remaining four years ofthe Plan, ministrieswere
made aware o f the financial resources likely to be made available from the CFET budget,
TFET,' and Bilateral and Multilateral sources, for the remaining years o fthe Plan period @e.
FY04 to FY07). The latter were outlined in assessments o f forward estimates o f allocations
for the ministries providedby the Budget Division inMPF.
'The Trust Fund for East Timor (TFET) receives contributionsfrom Australia, Finland, Ireland, Italy, Japan,
New Zealand, Norway, Portugal and the United Kingdom.TFET providesgrants for economic reconstruction
and development activities in Timor-Leste that are prepared and supervisedby the World Bank and the Asian
Development Bank. The World Bank is the trustee of the fund. Ministries are designatedto implement TFET
projects.
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Timor-Leste Road Map Final Draft, 15 April 2003
Prioritisation was influenced by the experiences during the first half o f the first year o f N D P
implementation and the need to address the immediate priorities approved by the Council o f
Ministers o n 22 January 2003. Programs to meet the immediate priorities are articulated in
detail in the Stability Program, which will be implementedwithin the next eighteen months.
The Stability Program i s presented in Annex 2.
F. ProcessDlmenslonsof Prlorltlsatlonand Sequenclng
In prioritisation and sequencing, ministries were assisted by some Development Partners
(UNDP, UNICEF, World Bank, AusAid and USAID) mobilising technical specialists and
facilitators to support key ministries in the prioritization and sequencing process. An
international consultant (or in the case o f larger ministries, two consultants) was assigned to
work with senior staff and focal persons in each ministry to advise and oversee the process.
This was accompanied by a series o f workshops, held during February 2003. The workshop
presentations outlined the proposals for prioritisation and sequencing o f programs. The
trainers familiarised the participants with the criteria and formats for prioritisation, and
helped the latter to relate these to budget submissions for FY04.
The prioritization and sequencing o f activities was guided by several criteria. They included
such aspects as (i)importance o f the activity for improved service delivery and the demand
for the service by the people (clients), (ii) when the service is needed (e.g. now, next year or
four years from now), (iii) capacity o f the ministry or agency to deliver the service and need
for technical assistance, if any, (iv) sustainability o f the activity or facility, (v) linkages with
and involvement o f other ministries, civil society organizations, communities and the private
sector, (vi) whether Government involvement would encourage or discourage similar
activities by other actors, and (vii) whether deferring the implementation o f the activity to
future years would improve the benefit streams. The ministries and agencies took these
criteria seriously and applied them as much as possible inthe prioritisation and sequencing o f
their programs. Some ministries achieved outstanding results; some others produced average
outcomes, while a few encountered difficulties in applying the criteria. Overall, the criteria
helped the Government officials to begin to think in strategic terms in assessing their
programs.
Additional workshops were held on Annual Action Plans and Quarterly Reporting Matrices,
followed by sessions on devising appropriate indicators for monitoring program
implementation.
The prioritisation and sequencing exercise, lasting from mid-January to late-March 2003,
resulted inthe ministries developing a definite set o f priority programs for the remaining four
years o f the NDP. These program priorities were then used as the basis for formulation o f
AAPs for FY04, feeding into the budget preparation. The final step in the process was the
refining o f the indicators developed for assessing progress on implementation o f the A A P s ,
and the devising o f a set o f key development indicators to measure overall Plan
implementation inthe remaining years o f the NDP.
G. Structural Constralnts
Prioritisation and Sequencing was carried out with an awareness o f the key structural
economic problems currently facing Timor-Leste that include (i)widespread poverty,
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unemployment and underemployment, (ii)dependence on external grant finance, due to
substantial trade and budget deficits, (iii) relatively high price levels that are incommensurate
withthe nation's level o f development, (iv) low levels o f skills and productivity, and (v) high
levels o f illiteracy.
H. FlnanclalConstralnts:Budget Parameters
Prioritisation and sequencing was undertaken with also an awareness o f the financial
constraints imposed by budget parameters. The Council o f Ministers has stressed the need to
formulate the prioritisation and sequencing based upon a sustainable medium-term fiscal
framework that i s intended to ameliorate future funding shortages.
Table 1 see Annex at end o f Part One) provides mid-year budget update (MYBU) estimates
o f CFET revenue for the six-year period FY02 to FY07, and compares it to MYBU forward
(s
estimates o f CFET expenditures. Revenues excluding those from First Tranche Petroleum
(FTP) but including external budgetary support under the three-year TSP (covering FY03,
FY04 and FY05), are indicated to range between $70.6 million and $75.0 million during the
first three years, decline there after to $57.5 million in FY06, and recover moderately to
$60.3 million in FY07. Revenues with FTP are projected to increase from $71.6 million in
FY03 to 96.6 million in FY05, decline to 83.0 million inFY06 and increase slightly to $86.5
million in FY07. CFET expenditures are projected to increase from $74.2 million inFY03 to
$80.0 million in FY04, $92.9 million in FY05. $102.4 million in FY06 and reach $105.0
million in FY07. The data indicate an anticipated funding gap between revenues (excluding
those from FTP) and expenditures ranging from $5.0 million inFY04, $20.2 million in FY05,
$45.1 million in FY06 and $44.7 million in FY07. However, including the FTP revenues,
funding gaps o f $19.4 millionand $18.5 million emerge only inFY06 and FY07 respectively.
It will be necessary to develop a credible strategy for addressingthe funding gaps. Inpursuit
o f this aim, ministries were asked by the Council of Ministers to keep their CFET budgets
withinthe limits o ftwo scenarios presented bythe Council o fMinisters. The Budget Division
inMPF developed these scenarios, on the basis both o f forward revenue estimates and onthe
results o f discussions with some Development Partners. Ministries were asked, ifpossible, to
keep within the lower scenario (Scenario 2). The two scenarios are summarized in Table 2
(see Annex 1).
Scenario 1 in Table 2 follows existing CFET forward estimates, and includes an increased
subsidy for the Power Authority, allowing for the limited progress made so far in revenue
collection in FY03. This scenario is not affordable within CFET, given the latest revenue
estimates. Scenario 2 i s based on a significantly reduced growth inexpenditures as compared
to Scenario 1, with the expenditure indicated to decline from $74.2 million in FY03 to 72.0
million in FY04 and $73.9 million in FY05, but increase to $80.4 million and $85.0 million
respectively inFY06 and FY07.
For the prioritisation and sequencing o f their programs, ministries were also requested to
consider the CFET allocations given to them, based upon the two scenarios, inproviding their
cost estimates for the programs. CFET allocations for the ministries, based o n the two
scenarios, are presented in Tables 3 and 4 (see Annex 1).
The Consolidated Fund for East Timor (CFET) is the Govemment's central account, structured to reflect
revenue, operating and capital income budget. Revenues are derived from Government taxes, Timor Sea
revenues, anddirect budget support from DevelopmentPartners.
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Taking these two CFET allocations into the Combined Sourcesg Budget for the remaining
years o f the Plan period, ministries were then provided with overall indicative Combined
Sources funding envelopes for each o f the remaining years o f the NDP, highlightingthe two
scenarios, as outlined in Table 5 (see Annex 1). They were requested to prioritize and
sequence their programs with reference to these overall Combined Sources funding
envelopes, and to the two alternative CFET scenarios (tables 3 and 4) within these envelopes.
The Combined Sources Budget Funding Envelopes are outlined in Table 5 (see Annex l),
together with the highand low case CFET expenditures scenario limits italicized.
Bilateral and Multilateral Funding: Ministries were also asked to refer to current forward
estimates for bilateral and multilateral expenditure, since some o f these allocations may not
match either the immediate priorities o f the Stability Program or the mediumand long-term
development priorities. Current Bilateral and Multilateralallocations are outlined inTable 6
(see Annex 1).
I. The MlllennlumDevelopmentGoals
Recently, the Government has also commenced a process o f internalising the Millennium
Development Goals (MDGs), to provide a means to assess the nation's development against
that o f other countries in the region and elsewhere, and disseminate information on this. This
exercise was facilitated by the fact that the goals and objectives o f the National Development
Plan already overlap to a large extent with those covered by the MDGs.
As i s well known, the MDGs comprise eight goals, most o f them to be achieved by 2015.
Each o f the M D G s addresses some key dimensions o f poverty andor sustainable
development and the enabling environments at the national and global levels for helping the
countries to achieve the goals. The targets and indicators under many o f the goals are
quantifiable, and provide a global blueprint that can be tailored to specific national
conditions. Commensurate with their circumstances, countries and their development partners
can develop strategies for both achieving goals and measuring progress inreaching them. .
Ministries currently are engaged inthe process o f assessing their sectoral objectives and aims,
in relation to the long-term achievement o f the MDGs. This also influenced their process o f
program prioritisation, by providing comparative human development criteria
relation to the East Asia and Pacific region through which the relevance o f programs could
- - particularlyin
be assessed further.
J. TheRoadMap
The Road Map summarises the results o f the Prioritisation and sequencing exercise
undertaken by the ministries during the first quarter o f calendar 2003. It presents the
programs that the Government o f Timor-Leste has prioritised as most crucial for the
development o fthe country.
The Road Map describes the main development issues faced by each ministry, and outlines
the programs they have prioritised to address these issues. It shows the way forward for
implementation o f the N D P over the next four years (FY04 to FY07).
The Combined Sources are CFET, TFET, bilateral and other multilateral sources, and UN Assessed
Contributions.
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Within the Road Map document, each ministry has prioritised a set of programs, and has
sequencedtheir implementation for the remainingyears of the NDP. It provides estimatesof
total funding required to implement the programs annually over the four-year period.
Expenditure estimates are provided by Ministry for each individual program, and for each
year of its implementationinAnnex 3.
The Government will utilise the Road Map as a basis for its Policy Dialogue with the
Development Partners and expects the latter to use the RoadMap in their funding decisions
andthe devisingoftheir country assistancestrategies for Timor-Leste.
In particular, the programs and their estimated costs specified in the Road Map will be
extremely useful in the discussionsbetweenthe Government and DevelopmentPartners and
inthe decisions onwhich programsthe DevelopmentPartnerswish to support duringthe next
four years (FY04to FY07).
K. NDP, StabllltyProgramand Road Map
The links and overlaps betweenthe National Development Plan, the Stability Program and
the RoadMap are illustratedinFigures 1to 3.
Figure 1. IllustrationofNDPandGaps
Figure2. IllustrationofOverlapsbetweenNDP, Gaps andRoadMap
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Figure3. Illustration of OverlapsbetweenNDP, Gaps, RoadMap and Stability Program
KDP-Year1 NDP Year 2
- NDP - l'ear 3 KDP - 1ear 4 NDP - Year 5
P a r t of AAPs Part of AAPs Part ot'A.APs Part of AAPs Part of AAPs
Strategies Strategies Strategies Strategies Strategies
Policies Policies
Laws Laws
Regulations Regulations
Programs Programs
Projects Projects
Activities Activities
NDP Gaps NDP Gaps
Part of AAPs of AAPS
Activities 111Activities IActivities Activities Activities
I
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PARTTwo
The main results from the Prioritisation and Sequencing exercise are presented in the
following sections.
For each ministry, they include the broad areas o f the programs prioritised, the timeframe for
their implementation, and the justification o f their importance. They address the immediate
(short-term) priorities as well as the medium and long-term development requirements. For
Government Structures," a brief summary is provided.
The RoadMap provides estimated costs for each year for all the programsprioritised by each
Ministryinthe prioritisation and sequencing exercise and the total fundingrequested for the
remaining four-year Plan period (FY04 to FY07). Detailed annual and total cost estimates by
program, including the costs o f the programs intendedto address the immediate priorities, are
provided for each o f the ministry's programs inthe Programme Matrix (see Annex 3).
The cost projections presented in the Programme Matrix are estimates. Some o f them have
hndingcommitments, while others have been identified as program o f interest to be funded
by Development Partners. For most o fthe sequenced programmes however, the Government
i s currently negotiating with the Development Partners. Given this situation, the Government
recognizes that it will not be inthe position to finalize this part o fthe document untilafter all
negotiations with the Development Partners have been completed this year.
A Mlnlstryof Agriculture, Forestryand Flsherles
The agricultural sector dominates Timor-Leste's economy. It contributes 2 1% o f GDP, and i s
the main source o f income in 94% o f villages. It provides 80% o f the food and subsistence
requirements o f rural households.
The goals o f the Ministry o f Agriculture, Forestry and Fisheries (MAFF) are intrinsically
linked with N D P priorities, to achieve food security, poverty reduction, rural employment
and agricultural diversification. These are also essential elements o f the Stability Program.
Additionally, the Ministry's programs have significant linkages with programs in other
sectors including infrastructure, education, natural resources management, and commerce and
industry.
It is important to recall that the CFET allocations to the agricultural sector (Le. MAFF) are
modest as compared to those provided through TFET and bilateral and multilateral sources.
For example, for FY03, MAFF's Combined Resources Budget was $25.3 million, o f which
CFET allocation comprised only $1.4 million. MAFF prioritised its programs in relation to
the requirements o f the prioritisation and sequencing exercise, but also added to this
lo The Govemment Structures include the Office of the Prime Minister and Council of Ministers, Capacity
Development Co-ordination Unit (CDCU), Provedor de Direitos Humanos e Justica (Ombudsman and Human
Rights), Office of the Inspector General, Office for the Promotion of (gender) Equality, Independent Electoral
Commission, Banking and Payments Authority, and Timor Sea Office.
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programs and projects based on community needs as well as programs (to be) funded under
TFET and other bilateral and multilateral sources inthe agricultural sector.
MAFFhas prioritised and ranked its programs ina systematic manner adheringto the criteria
specified for prioritization and sequencing. The programs are presented inAnnex 3. They are
sequenced over the remaining four years o f the Plan period, with estimated costs for each
program for each year. The priority programs o f MAFF fall in the broad areas o f (i) policy
development, (ii)development o f irrigation including community irrigation and water user
associations, (iii) construction o f feeder roads, (iv) development o f research and extension
capabilities, (v) inputs supply and support for food crops production, (vi) improving storage,
processing and marketing o f food crops including better utilisation o f coconut for, among
others, edible oil extraction, (vii) development o f commercial and industrial crops including
replanting o f coffee and coconut and encouraging private sector to establish oil palm as
appropriate, (viii) fisheries legislation and licensing and promoting off-shore fisheries
through foreign investments, (ix) forestry regulation and development including forest
replanting and protection o f watersheds, (x) establishing and implementing revolving credit
systems and training youth for managing co-operatives in sucos and postos, (xi) Promoting
cattle rearing and co-operative dairying, and (xii) examining trade and tariff issues affecting
rice and other important crops. Many o f the activities will be carried out in cooperation
andor coordination with civil society organisations including the Church and development
partners.
The Ministry requires $38.8 million to implement its programs during the remaining four
years o f the NDP, divided into the following indicative amounts for each year, in millions o f
dollars:
B. Mlnlstryof Developmentand Envlronment
Within the Ministry o f Development and Environment (MDE), the prioritisation and
sequencing exercise resulted in several changes, both to existing programs and to their
sequencing. Individual matrices were prepared for the Divisions o f Tourism, Investment and
Environment and for the Directorate o f Natural and Mineral Resources.
Inaddition to prioritisation o f the programs, the Ministryalso discussed a series o f possible
future actions, which could improve the enabling environment for the private sector. These
helped them to develop a framework for establishing priorities. The actions include (i)
enactment o f company and investment laws, after appropriate public consultation, (ii)
increased donor assistance to advise o n economic policy and private sector development, (iii)
establishment o f an internationally staffed business promotion centre, and (iv) exploration of
opportunities for backward linkages to offshore investments from companies investing in oil
and gas operations.
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The Ministry'smainpriorityprograms/projectsbyDivisionsare as follows:
Inthe DivisionofTourism:
? Website development for TourismPromotion;and
? LegalandRegulatory Frameworkfor Tourism.
Inthe DivisionofInvestment:
? ProductionofInvestmentLiterature includinganInvestor InformationKit;
? OrganisationofInvestmentForums;and
? FeasibilityStudies for Investment Sectors.
Inthe EnvironmentDivision:
? Establishment ofEnvironmentalImpactAssessment (EIA)Regulationsand
Pollutionmonitoringandcontrolregulations;and
? Formulationofa National EnvironmentPolicy.
Inthe DirectorateofNaturalandMineralResources:
? Developa core of20 Highly-SkilledOil andGas Professionals; and
? FormulationofMiningandPetroleumLaws.
Details of the Ministry's programs and their sequencing are outlined in Annex 3, together
with estimated costs for each program, for each of the remaining four years of NDP
implementation.
The Ministryrequires $ 3,210,682 millionto implementits programsfor the remainingyears
of the NDP, dividedintothe followingindicativeamounts for eachyear, inmillions of
dollars:
C. Mlnistryof Educatlon,Youth, Culture andSport
The programs implemented by the Ministry of Education, Youth, Culture and Sport
(MECYS) are crucial in meeting the aims of the NDP, particularly in the promotion of
poverty reduction. In the Countrywide Consultation, a majority Timor-Leste's population
consultedranked educationas its number one priority among the top three priorities for the
country.
The Combined Sources budget allocations for the Ministry are the highest of any of the
ministries, for each of the remainingyears of NDP implementation. About a quarter of the
CFET budget is allocated to MECYS for education. Similarly, more than a fifth of the
projectedbilateral aid from FY02 to FY06 is for education, as are one-fifth of the TFET
resources.
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The Ministry's current general priority requirements are to (i)build more primary and
secondary schools to achieve universal basic education, (ii) improve the quality o f education
through teacher development and curriculum and textbook development, and (iii)strengthen
the Ministry's capacity to plan and manage the provision o f education.
Thorough rigorous prioritisation and sequencing, the Ministry identified the most important
gaps in the strategies and programs presented in the NDP. Buildingon this, they decided on
program activities to be commenced during FY04 and subsequent years o f the Plan period.
The Ministry was concerned particularly with the mechanisms o f service delivery for the
main levels o f education - at pe-primary, primary, junior and senior secondary levels, and
technical and vocational education. It has also become concerned inrecent months, at the low
levels o f execution o f the Ministry's FY03 budget, particularly in the goods & services and
capital development areas.
Indiscussions with staff through workshops and meetings, Department Directors inMECYS
produced a sequencing o f their priority programs with estimated costs. They indicated the
level o f priority for each o f the activities intheir area, the year they should commence, and an
indicative cost for the activity inthe medium-term.
The Ministry's proposed expenditures o f $53.5 million for FY04 are somewhat above the
Combined Sources Indicative Envelope o f $45.8 million, but are below the latter for
subsequent years, notably inFY07. This reflects the aim o f the Ministry to focus expenditures
on improving service delivery inthe next two years. The Ministry'spriority programs for the
remaining Plan period cover the broad areas o f (i)managing and delivering education
including at early childhood, primary, junior secondary and secondary levels as well as
technical and vocational education, (ii)managing and delivering teacher training, (iii)
managing and administering the Ministry's functions at the central and district levels, (iv)
developing an Education Management Information System (EMIS), (v) implementing the
literacy program, (vi) development o f textbooks and teaching materials, and (vii)
implementation o f cultural, youth and sports programs.
The Ministryhas selected a number o fprograms withinthe above areas on which it intends to
focus in FY04. This emphasis in sequencing reflects the Ministry's concern to improve
educational delivery in the short-term. The programs include (i) design and introduction o f an
information campaign o n the importance o f schooling, (ii)implementation o f measures to
reduce school drop-out and repetition rates, (iii)introduction o f a Teaching Diploma and
teacher, headmaster and educational manager training, (iv) language o f instruction
development (Tetun and Portuguese), (v) curriculum review and development including
rehabilitation o f the Institute o f Continuing Education and strengthening its capacity, (vi)
building the capacity o f the Ministry for policy formulation, planning and project
development, (vii) improving school quality through the Fundamental School Quality
program, (viii) literacy campaign, (ix) training and structural support for youth employment,
and (x) structuring and capacity buildingfor sports institutions.
Church, other private and community schools, which account for more than a fifth o f all
schools in the country, play an important role in the provision o f primary and secondary
education. In spite o f the significant expansion o f public schools visualised, it would be
difficult for MECYS to meet the exponentially increasing demand for schooling brought
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about by the population dynamics." Church, other private and community schools will
continue to be important in delivery o f education for the foreseeable future. Accordingly, the
Ministry's programs incorporate continued support to Church, other private and community
schools.
Details o f the Ministry's programs and their sequencing are outlined in Annex 3, together
with estimated costs for each program, for each o f the remaining years o f NDP
implementation.
The Ministry requires $194.9 million to implement its programs for the remaining years o f
the NDP, divided into the following indicative amounts for each year, in millions o f dollars:
D. Mlnlstryof ForelgnAffalrsand Cooperation
The Ministry o f Foreign Affairs and Cooperation (MFAC) has identified nine sub-programs,
corresponding to its nine organisational divisions. Within these, areas are prioritised and
sequenced for implementation in the remaining years o f the NDP. The main areadactivities
are (i) establishing the Office o f the Director General, (ii)provision o f policy advice to the
Minster's Office, (iii)management o f the Ministry, (iv) establishing three Embassies with
appropriate support facilities, (v) support for participation in international events, (vi)
regional capacity building, (vii) development o f Protocol Guidelines, (viii) completion o f
international treaties and national legislation ratifying these treaties, (ix) finalising country
agreements with Development Partners, (x) strengthening the capacity o f the Ministry, and
(xi) finance, administration and humanresources management.
Details o f these areas are presented inAnnex 3, where the Ministry's programs are sequenced
over the remaining Plan years, together with sources o f funding.
Much o f the Ministry's work will be funded from grants fiom external Partners including
international organisations, for particular activities hndamental to the Ministry's work, such
as attendance at international events and Embassy support.
The Ministryrequires $US 11.6 millionto implement its programs for the remaining years o f
the NDP, divided into the following indicative amounts for each year, inmillions o f dollars:
"AbouthalfthepopulationofTimor-Lesteisestimatedtobebelow16years.
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E. Mlnlsttyof Health
Healthprovision is crucial for poverty reduction. Health was ranked second only to education
in importance by the people o f Timor-Leste in the Countrywide Consultation. In its
implementation o f NDP, the Ministry o f Health has pursued several key strategies. Most
notable among these are (i) emphasis onpreventive and promotive health care, providedclose
to the community, with an additional aim o f limiting expenditure on health care, (ii) adoption
o f primary health care policies that enable increased accessibility and coverage, and (iii)
adoption o f policies for integrating the health care system with other sectors. The strategies
have been defined and further elaborated in East Timor's Health Policy Framework,
published by the Ministry inJune 2002.
In particular, the Framework defines a basic package o f services for delivery within the
districts. It outlines policies to decentralise the health service through more effective
participation by local health workers and communities in the development and
implementation o f health programs. These two policy aims have been important for the
Ministry in assessing its programs for prioritisation and sequencing. Monitoring o f the
activities in the FY03 A A P s including those covered under the Transition Support Program
has also highlighted the importance o f extending health care including through mobile
clinics, particularly inpoorer and more remote areas.
Inprioritisation o f its programs, the Ministryhas paid attention particularly to the objective
o f bringing health services closer to the population. It has also included proposals for
improving both basic training for community health workers and the mobility o f health
personnel to facilitate service delivery to remote areas, which i s one o f the immediate
priorities. Additionally, the Ministry has focused on identifying gaps in its programs within
the framework o f the NDP.
Inits prioritisation for the next four years, the Ministrywill be implementingprograms on (i)
child health including immunisation, nutrition, growth monitoring, micronutrient distribution,
breast-feeding and nutritional education, (ii) maternal health including antenatal care and safe
motherhood, (iii)reproductive health, (iv) health promotion, with particular attention to
schools, (v) control o f communicable diseases including malaria and treatment o f
tuberculosis and diarrhoea, (vi) environmental health promotion, (vii) drugs and medical
supplies, (vi) laboratory services, (vii) rehabilitative services, (viii) establishment o f a Health
Information System, and (ix) support for logistics and finance administration. Given their
importance, these programs will continue throughout the remaining four years o f the Plan
period.
Details o f these programs and their sequencing are outlined in Annex 3, together with
estimated costs for each program, for each o f the remaining years o f NDP implementation.
The Health Sector requires $83.8 million to implement its programs for the remaining four
years o f the NDP, divided into the following indicative amounts, inmillions o f dollars:
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F. Ministryof interior and StateAdministration
Following a recent decision by the Council o f Ministers, two new ministries have been
created - the Ministry o f the Interior and the Ministry o f State Administration. The
responsibilities and programs o f the former Ministry o f Internal Administration have been
divided between these two new ministries.
Consequently, the priorities decided upon by the former Ministry o f Internal Affairs have
now become priorities in the two new ministries, depending upon which areas o f the former
Ministerial portfolio have become their respective responsibilities.
Prior to the Ministerial reorganisation, the former Ministry o f Internal Administration (MIA)
carried out a thorough assessment o f its programs in relation to the requirements o f the NDP.
Itidentified gaps and focussed onthe key issue of service delivery. Further, the Ministry paid
attention to the immediate priorities including the need to legitimise the role o f the Chefes de
Suco and empower functionaries at the'sub-national levels.
1. Ministry ofInterior
The new Ministry o f Interior will be implementing former MIA programs in the areas o f (i)
Civil Security, (ii)Fire Rescue and Emergency Services, and (iii)National Disaster
'
Management.
Details o f these programs and their sequencing are outlined in Annex 3, together with
estimated costs for each program, for each o f the remaining years o f NDP implementation.
The new Ministry o f Interior requires US$ 62.1 million to implement its programs for the
remaining years o f the NDP, divided into the following indicative amounts for each year, in
millions o f dollars.
2. Ministry for State Administration
Inthe key area of local government administration, the ministryis concerned with improving
the quality o f its staff through detailed programs o f training and capacity -building, and to
improve the delivery o f services to local communities. In this regard, the enactment o f the
law on local government and its implementation are considered crucial. This i s rated to be a
major priority for the Ministry.
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Similarly, there is a strong focus on supporting and building the capacity o f District
Community Development Committees, and enabling local institutions and community-based
groups to participate. In the local government area, the priority programs include (i)
enactment of the Law on Local Government, specifymg the roles and responsibilities o f sub-
national government administrations, (ii) strengthening the capacity o f the Administration o f
Local Government staff in administration, management, finance and budgeting, (iii) creation
and strengthening of institutional mechanisms for coordination o f development activities in
relatively disadvantaged regionddistricts, and (iv) promotion o f popular participation in
economic, social and political processes, particularly by the poor and vulnerable groups.
These areas will become the main priorities in the portfolio o f the new Ministry for State
Administration, which will also be implementing the former MIA programs for the Civil
Service Academy, Public Service, Government publications including the Gazette, and
maintenance and development o f the National Archives.
Details o f these programs for the new ministry, and their sequencing are outlined inAnnex 3,
together with estimated costs for each program, for each o f the remaining years o f N D P
implementation.
The Ministry o f State Administration requires US$ 30.1 million to implement its programs
for the remaining years o f the NDP, divided into the following indicative amounts for each'
year, in millions o f dollars:
3. The Two MinistriesCombined
Since neither CFET expenditures nor Combined Sources Indicative Envelopes are available
as yet for the two new ministries, their combined P and S Submission, together with their
original CFET and Combined Sources envelopes, are presented below.
The former Ministry o f Internal Administration was and the present Ministry o f Interior is
also responsible for the Timor Leste Police Service (PNTL).
4. Timor LestePolice Service
Considerable time has been spent by Timor Leste Police Service (PNTL) Section Heads in
discussing the N D P planning process, with attention particularly to gaps in the programs
specified originally inthe NDP.
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Of particular concern has beena growing realisation o f gaps within the main administrative
functions of PNTL. Additionally, the Police Service is acutely aware of the need to
strengthen its capacity to meet its responsibilities in ensuring security, as indicated in the
immediateprioritiesandelaboratedinthe StabilityProgram.These centre not only onregular
policing in the community, but also on PNTL's responsibilities for border patrol and
immigration. Also, they focus on the needto improve the response of the Police Force to
civilianprotest includingmanagementof such incidentsas exemplifiedinthe riots inDili on
4 December2002.
Additionalfunding is beingsought for developing the FieldTrainingProgramandto support
newly recruited graduates. Assistance is also required to develop a program o f specialist
trainingcourses inareas suchas criminalinvestigation.
PNTL proposedthat its activities for implementationbe presentedin one program, with six
components. Details of their sequencing, sources of funding, and estimated costs, are
presented in Annex 3. The prioritisedprogram components are (i) the Police College and
providing field, specialist, and management training, (ii)police operations including
community policing, criminal investigations and internal security, (iii)administration
including human resources development, planning and finance, (iv) establishment of an
effective ImmigrationService, (v) development and maintenance of the Rapid Intervention
Units inDiliandBaucau, and(vi) maintenanceo fthe BorderPatrolandMarine Unit.
An outline of these programs and their sequencing is presented in Annex 3, together with
estimatedcosts for eachprogram, for each o fthe remainingyears o fNDP implementation.
The PNTL requires US$ 59.4 millionto implement its programs for the remaining years of
the NDP, dividedintothe followingindicative amountsfor each year, inmillionsof dollars:
At the time of completionand submission o f the priorityprogramsby PNTL, the Councilo f
Ministers approved the recruitment, training and equipping o f 500 cadets for the Rapid
Deployment Group (RDG). The cost of this is estimated to be $5.0 million in FY04 with
recurrent costs of $1.0 millionper year during the next four years and is incorporated in the
proposedP andS expenditure for PNTL.
G. Mlnlstryof Justlce
As noted in the Background Document prepared and circulated by the Government to the
participants in the December 2002 Meeting with Development Partners, the Ministry o f
Justicehasmade some progressinestablishingkeyinstitutions, notablythe courts system, the
offices o f the ProsecutorGeneraland Public Defender, and a framework for judicialtraining.
Recently, the Superior Councilfor the Judiciary has also beenestablished. However, severe
problems remain. Service delivery is still limited, resulting in substantial delays in the
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presentation o f cases, a large backlog o f unresolved cases, inconsistent decision-making, and
a limited legitimacy o f legal authority.
Inits assessment o f its programs, the Ministryhas paid attention particularly to gaps inNDP
implementation, notably in capacity building via recruitment and training. Addressing these
needs i s also intended to meet the requirements o f the immediate priority to strengthen the
justice system including both formal and customary systems in order to improve the
provision of judicial services, through increasing the number o f jurists, and enhancing the
quality and delivery o f services including provision o f adequate legal assistance. Further, it i s
to cater to improved institutional co-ordination and increased community awareness o f laws
and legal procedures.
The Ministryhas prioritised a set o f programs for implementation inthe remaining four years
o f the Plan period. These are presented in Annex 3, with sequencing and indicative funding
requirements.
The priority programs are inthe following areas:
a. Service Delivery through District Courts, Public Defender's Office, Office o f the
Prosecutor-General, Appeals Court, and the Superior Council for the Judiciary. This
will include the recruitment o f international judges, prosecutors, defence lawyers,
court clerks and interpreters, promoting the use o f hnctional registries, and improving
internal reporting systems;
b. Improving the Prison systemincluding recruitment o finternationaltrainers to train
Timorese trainers o f Prison Guards, and organising vocational training, work
programs and literacy classes for detainees;
C. Capacity buildingthrough the Judiciary Training Centre;
d. Framework for legal Consistency through assessment and legislation;
e. Land and Property, Civil Registry, Notary, and Administration; and
f. Strengthening andprovidingassistance for mediation andresolution mechanisms at
national, district, sub-district and community levels.
The Ministryrequires $21.5 millionto implement its programs for the remaining years o fthe
NDP, divided into the following indicative amounts for each year, in millions o f dollars:
H. Mlnlstryof Planningand Finance
For implementation o f NDP, the Ministry o f Planning and Finance (MPF) has established a
framework for sustainable public sector financial management, administration and
accountability. The Ministry has eight Divisions: Treasury, Budget, East Timor Revenue
Service, Customs, Government Procurement Supply and Inventory, Statistics,
Macroeconomic and Taxation Policies, Administration and Information Technology, and
Planning and External Assistance Management. Several o f these Divisions are proposing new
initiatives for funding during the remaining years o f the NDP, based upon their
Page 25 of 33
Timor-Leste Road Map Final Draft, 15 April 2003
implementation experiences during FY03, and taking into consideration the immediate
priorities.
In addition to its ongoing functions o f budget formulation and management, the Budget
Division aims to focus on substantial capacity building activities for national staff, through
the provision of on-the-job training, mentoring, short courses, and targeted training in
financial management and budget execution.
Similarly, in tandem with its work to oversee and report on the execution o f the budget,
payroll and maintenance o f public accounts, the Treasury is developing systems for
mentoring and on-the-job training for local staff.
In addition to its functions o f overseeing tax collection and developing the Government's
taxation administration system, the East Timor Revenue Service intends to spend 25% o f its
budget o n developing capacity for Timor Sea taxation officers through attendance at courses,
workshops and in-house training.
Similarly, a substantial proportion o f the expenditure o f the Division o f Administration and
Information Technology will be devoted to designing and c a w i n g out a needs assessment
study and a human resources development plan for strengthening IT provision within the
Ministry.
To improve its work in revenue policy and forecasting, the Macroeconomic and Tax Policy
Program intends to devote approximately a quarter o f its budget to improving local staff
knowledge o f intemational best practices.
The Procurement Unit i s devoting over half o f its planned expenditures for FY04 to revising
procurement regulations, inan attempt to improve levels o ftransparency and competitiveness
and increased conformity with international guidelines.
In developing a strategy for wider information gathering by agencies, and for improved co-
ordination and dissemination, the Statistics Department is focusing on the need to develop the
National Accounts required by the NDP, both sectorally and in relation to the overall
measurement o f economic growth and poverty reduction.
The Planning and External Assistance Management Division (PEAMD) performs a crucial
role within the Ministry, overseeing and monitoring NDP implementation, mobilising support
for the Plan, engaging donors, detailing donor funding, and disseminating information to
stakeholders. Its priority programs/program components are particularly important for
planning and mobilising resources for Plan implementation. The latter includes notably the
establishment and maintenance o f an effective data management system to register and
facilitate monitoring o f all external assistance.
The programs prioritised by the Ministry o f Planning and Finance are presented in Annex 3,
withsequencing, estimated costs, and indicative sources o f funding, for each o fthe remaining
years o f N D P implementation.
The Ministry is requesting $ 22.4 million to implement its programs for the remaining years
of the NDP, divided into the following indicative amounts for each year, in millions o f
dollars:
Page 26 of 33
Timor-Leste Road Map Final Draft, 15April 2003
1. Mlnlstryof Transportatlon, Communlcatlons,and PubllcWorks
Within the Ministry of Transportation, Communications, and Public Works (MTCPW), the
Department ofWater andPublicWorks aimsto provideessentialinfrastructureto support the
economic and social development o f Timor-Leste. The Ministry's rural water supply
programsare designedto complementandbuildonthose already includedindonor programs
supportedby development partners, andwill focus onbuildingcapacity for the sustainability
o f these schemes.A new initiative within the Department is the provisiono f models o f low-
cost bamboo housing, and training packages to communities to build such housing in an
attemptto improvethe housing/livingconditions.
The Ministry's plans for building, improving and maintaining roads during the next four
years are crucial not only for maintainingtransport links and communications, but also are
important particularlyinenhancingmarketaccess for farmhouseholds.These plans comprise
the bulkof its expenditureproposals.
Equally important, however, are its programs for controlling floods and rehabilitation of
public buildingsfor community use. All of these will provide opportunities for employment
creation, managedthrough community involvement.
In addition, the Transport and Communications Department is putting forward larger-scale
programs, which are vital both for maintaining transport and communications connections
within the country includingwith the enclave of Oecussi, and Timor-Leste's links to other
countries.Amongst the most important o fthese are projectsto improvepostalservices.
The priorityprogramsofthe Ministryspanthe areas including(i) rural water and sanitation,
withcomponentsininstitutionalandcapacitybuilding,(ii) urbanwater supply andsanitation,
(iii) floodcontrol, (iv) roadandbridgerehabilitationandimprovement,(v) postalservices,
and(vi) landtransport.
Details of these programs and their sequencing are outlined in Annex 3, together with
indicative estimated costs for each program, for each of the remaining years of NDP
implementation.
The Ministryrequires$255.2 millionto implementits programsfor the remainingyears o f
the NDP,dividedintothe followingindicative amounts for eachyear, inmillionso f dollars:
Page 27 of 33
Timor-Leste Road Map Final Draft, 15April 2003
J. Secretary of Statefor Defence
The Secretary o f State for Defence (SSD) has undertaken a thorough review o f its programs,
particularly inrelation to the requirements o f the NDP and the immediate priorities. It has put
forward three programs, all o f which it considers to be o f equal priority. These are (i)
Defence Organisation, with components covering recruitment and training, (ii) procurement
o f equipment and supplies, and (iii)facilities development and maintenance.
Details o f these programs and their estimated sequenced costings are outlined in Annex 3.
The first program, Defence Organisation, i s the overarching program inthe effort to improve
Timor-Leste's defence. The other two programs underpin this effort.
Sequencing i s particularly important inthe implementation o f SSD's programs. For example,
current facilities for the Defence Force o f Timor-Leste (FDTL) are inadequate, and the
strategic location and training o f battalions i s dependent o n the construction and
refhrbishment o f buildings,planned during FY04.
Total expenditure proposed by SSD for FY04 is $10.6 million as compared to the current
indicative Combined Sources Funding Envelope o f $8.4 million. However, for subsequent
years, proposed expenditures are within indicative envelopes.
The Secretary o f State for Defence requires $29.1 million to implement its programs for the
remaining years o f the NDP, divided into the following indicative amounts for each year, in
millions of dollars:
K. Secretaryof Statefor LabourandSolidarity
The Secretary o f State for Labour and Solidarity (SSLS) has undertaken a detailed review o f
its programs implemented within the NDP, noting in particular gaps in its provision, and the
requirements o f the immediate priorities. The latter is particularly important, in that Labour
and Solidarity has been developing programs in important areas such as vocational training
including the setting up and strengthening o f training centers, the development o f a labour
market database, and the dissemination o f information on employment opportunities.
Page 28 of 33
Timor-LesteRoad Map Final Draft, 15April 2003
In other crucial areas such as the provision of social services for children and the disabled,
programs have been redefined to improve service delivery. The women's unit i s placing
greater emphasis in its programs on the provision o f skills training to women for setting up
small businesses.
The Secretary o f State's prioritised and sequenced programs reflect the results o f its program
review, with a strong emphasis on the funding requirements for assisting the veterans. Ineach
o f the remaining years o f NDP implementation, almost one-half o f the expenditures will be
devoted to veterans' programs.
The priority programs fall inthe areas o f (i) Veterans' Affairs, (ii) employment and skills
development, (iii) worker protection and industrial relations, (iv) staff training and skills
development, (v) provision o f social services for children, (vi) development o f the Women's
Unit,(vii) provisiono fsocial services for the disabled, and (viii) development o fthe
Emergency and Humanitarian Assistance Unit.
An outline o f the programs put forward by the Secretary o f State for Labour and Solidarity,
together with sources o f funding and the expenditure required in each year o f N D P
implementation are provided inAnnex 3.
The Secretariat requires $25.9 million to implement its programs for the remaining years o f
the NDP, divided into the following indicative amounts for each year, inmillions o f dollars:
* The Combined Sourcesindicative envelope figures presentedin this table contain significant bilateral funds,
of approximately US$9.5 million annually, providedto the Secretary of State for emergency food distribution.
CFET allocations for the Secretary o f State are limited, at a projected average o f less than
$0.5 million for the remaining years o f the NDP. Hence, substantial bilateral funding will be
required for the implementation o f its prioritised programs.
L Secretaryof Statefor Commerceand Industry
The Secretary o f State for Commerce and Industry comprises two Divisions - Industry and
Trade. The priorities for each o f the Divisions are:
Inthe Division o f Industry:
? Regulatory Requirements for Industrial and Economic Zones;
? Development Policy Framework for Micro-FinanceKredit for small and medium size
enterprises.
Inthe Division o fTrade:
? Support for Export-related Industry Inclusion in an Industrial Zone;
? Domestic Trade Promotion and Domestic Market Linkages.
Page 29 of 33
Timor-LesteRoad Map Final Draft, 15 April 2003
An outline o fthe programs put forward bythe Secretary of State for Commerce and Industry,
together with sources o f funding and the expenditure required in each year o f N D P
implementation are provided inAnnex 3,
The Secretariat requires $ 1,154 million to implement its programs for the remaining years o f
the NDP, divided into the following indicative amounts for each year, inmillions o f dollars:
M. The Offlceof the Presldent
Following independence, the Government established the President's Office, funded with
resources from the CFET budget. The Office will be implementing two programs for the
remaining years o f the NDP, centring on the further development o f its Secretariat, and on the
provision o f support for Presidential duties.
Inboth these areas, a major focus will be on capacity-building. Inthe Secretariat, there will
be a prioritisation o f the areas o f protocol, the provision o f advisers, and information
technology support. Details o f the programs put forward by the President's Office, and their
sequencing are outlined inAnnex 3.
Programs will be funded from CFET and bilateral and multilateral sources. The President's
Office is requesting $0.8 million from the CFET budget and additional resources fiom
bilateral and multilateral sources to.implement its programs for the remaining years of the
NDP, divided into the following indicative amounts for each year, inmillions o f dollars:
N. The NatlonalParllament
Resources for the National Parliament cover remuneration o f Members of Parliament and
funding for the Parliament's Secretariat. In the programs for the remaining years o f NDP
implementation, funding is focused primarily on capacity building for improved
communication with Government, and for dissemination o f Parliamentary activities and
decisions.
Outlines o f the proposed programs o f the Parliament are given in Annex 3, together with
indicative estimated costs for each program, for each o f the remaining years o f NDP
implementation. Programs will be funded from CFET and bilateral and multilateral sources.
Page 30 of 33
Timor-Leste Road Map Final Draft, 15April 2003
The Parliament is requesting $9.4 million to implement its programs for the remaining years
o f the NDP, divided into the following indicative amounts for each year, in millions o f
dollars:
0. State NationalSecurityServlce
The formation of the Servico Nacional de Seguranca do Estado (SNSE) was approved in
September 2002 (under Organic Law 3/2002). As stated in its prioritisation and sequencing
documentation, the objective o f the SNSE is to provide early warning o f politically motivated
violence and other actions detrimental to national security.
Initial funding for the SNSE was provided from the Prime Minister's Contingency Fund.
SNSE i s requesting funding for the collection and analysis o f information, and for the
dissemination o f intelligence.
Details o f SNSE's programs and their sequencing are outlined inAnnex 3, together with
indicative estimated costs for each o f the remaining years o f NDP implementation. The SNSE
requires $ 0.4 million to implement its programs for the remaining years o f the NDP, divided
into the following indicative amounts for each year, in millions o f dollars:
Figuresfor the SNSE's CFET budgetandindicativeCombinedSources FundingEnvelopesare not yet available.
P. GovernmentStructures
The Government Structures Portfolio represents those organisations that are not overseen
directly by a Minister or Secretary o f State. Their functions are described in detail in the
CombinedSources Budget Document (2002-03).
For the prioritisation and sequencing exercise, a number o f changes have been made in
constituent programs, in relation particularly to observed gaps in NDP implementation, and
the immediate priorities. N e w initiatives are the creation o f the Timor Sea Office to provide
legal and negotiating advice to the Prime Minister and the Council o f Ministers, and the
moving o f the Capacity Development and Co-ordination Unit into the Prime Minister's
Office. This move reflects the priority given to CDCU's work in co-ordinating capacity
buildinginthe ministries through the appointment of focal persons to deal specifically with
capacity buildingin each ministryand agency (Secretary o f State).
Page 31 of 33
Timor-Leste Road Map Final Draft, 15 April 2003
The Office for the Promotion of Equality has reorganised its programs to create a more
effective approach to gender mainstreaming in policy development through ongoing training
inbothgovernment institutionsand civil society organisations.
Details o f the constituent organisations o f the government structures, and their sequencing,
together with sources o f funding, are outlined in Annex 3, together with indicative estimated
costs for each of the remaining years o f N D P implementation. These are summarised in the
following:
CS - Combined Sources Envelope;
PS - ProposedP and S Expenditure; and
CFT CFET Expenditure(scenario2)
* No figures are
-
yet available for CDCU indicative envelopes or CFET expenditure.
Q. The Oecwsl Enclave
Inaddition to the programs prioritised above, the Government is also requesting finding for
programs to be implemented in Oecussi, due to the difficulties o f its current situation. These
are to be implemented during the next eighteen months. The programs are:
? Ferry Service;
? Communications;
? Cattle Raising;
? Improving Rice Yields;
? Small-scale Ago-Processing, including improved rice-milling;
? Tourism Development;
? Bricks and other construction materials to supply to the local market;
? Fumiture production for the local market;
? Development o f small-scale industries and services;
? Strengthening o f new Vocational Training Centre;
? Aquaculture;
? Production ofEucalyptus oil; and,
Page 32 of 33
Timor-Leste Road Map Final Draft, 15 April 2003
? Replanting o f sandalwood
Total funding required for these activities is estimated at $2.4 million.
The rationale for some o f programs and the cost estimates for each o f these programs are
provided in the Stability Program in Annex 2. These programs have not yet been allocated to
the respective ministries.
CONCLUSION
In presenting the Government's priorities in each sector, the Road Map has attempted to
provide a basis for the Policy Dialogue between the Government and its Development
Partners.
The document has outlined both the main development priorities for each ministry, and the
reasons for their prioritisation, under conditions o f resource constraints.
The information in the Road Map provides the detailed knowledge and understanding
required for Government ministries and Development Partners to work together to finalise the
funding arrangements for Timor-Leste's programs for the remaining years o fthe NDP.
Page 33 of 33
Annex to Part One
Table 1: CFET Revenue andMYBUForwardEstimateso fExpenditure
FTP-FirstTranche ofPetroleum(revenues).
* The MYBU hadno estimates for FY07. Recurrentexpenditure is estimatedto grow by 2.5 per cent.
The MYBU forward estimates do not includerevisions due to any changes in wages, or in subsidiesto
the PowerAuthority.
Table 2: MYBUandReducedExpenditure Scenarios
FY03 FY04 FY05 FY06 FY07
Scenario 1(MYBU)
ExpenditureTotal 74.2 82.0 92.9 102.5 105.0 '
Recurrent 60.7 67.1 70.3 77.4 80.0
Power Subsidv 6.5 4.9 2.6 0.0 0.0
Recurrent 60.7 62.1 65.3 72.4 75.0
Power Subsidy 6.5 4.9 2.6 0.0 0.0
Capital & Development 7.0 5.0 6.0 8.0 10.0
FundingShortage 1.2 18.0 24.7
THEROADMAP Annex to Part One
Repdblica Democratica de Timor-Leste
President 0.41 0.31 0.31 0.31 0.3
Parliament 0.9 0.9 0.9 0.9 0.9
Goa Structures 2.8 2.3 2.3 2.2 2.3
FDTL 4.4 6.8 6.8 6.8 7.1
Intemal Admin 4.3 4.2 4.6 5 .O 5.1
Table 4. CFET Allocations for Scenario 2
Ministry/Agency FY03 FY04 FY05 FY06 FY07
President 0.4 0.2 0.2 0.2 0.2
Parliament 0.9 0.8 0.8 0.8 0.8
Govt Structures 2.8 2.2 2.2 2.1 2.2
FDTL 4.4 6.0 6.1 6.1 6.3
Tran, Com & PW 4.7 6.9 7.1 6.9 7.1
Power Subsidy 6.5 4.9 2.6 0.0 0.0
Total 67.7 67.0 67.9 72.4 75.0
Page 2 of 4
THEROADMAP Annex to Part One
Repfiblica Democratica de Timor-Leste
CFETScenario2 5.1 3.9 4.1 4.1 4.3
Trans, Com & PW 40.5 31.9 30.1 27.3 25.7
CFETScenario 1 4.7 7.7 7.8 7.6 7.9
CFET Scenario2 4.7 6.9 7.1 6.9 7.1
Page 3 of 4
THEROADMAP Annex to PartOne
Republica Democraticade Timor-Leste
Table 6: Bilateraland'Multilatera1ExpendituresfromForwardEstimates
1 MinistrvlAgencv
MinistrylAgency I FY03 I FY04 1 FY05 I FY06 I
. I _ ,
President 0.01
0.0 0.0
0.01 0.01
0.0 0.0
Parliament 2.41
2.4 0.1 I 5.1
5.11 0.2
IGovt Structures
Govt I 11.2
11.21 7.7
7.71 5.01
5.0 5.01
5.0
IntemalAdmin 0.5 0.0 0.0 0.0
TNPL 2.2 1.9 1.4 0.0
Justice 1.4 1.4 1.6 1.5
Devel & Env 1.7 1.o 1.1 1.o
Trade & Ind 0.0 0.0 0.0 0.0
Agriculture 16.5 9.4 11.7 7.4
Education 18.3 16.8 14.5 13.5
]Health I 5.31 2.1 I 1.11 0.01
Labour & Solid 10.3 9.8 9.6 9.5
Foreign Affairs 0.0 0.0 0.0 0.0
Plan & Finance 3.9 13.8 11.6 1.8
Tran, Com& P W 20.41 20.81 22.31 19.7
Total 96.21 86.41 85.91 60.5
Page4 of 4
The Road MaD-Annex 2
Stability Program
RepublicaDemocraticade Timor-Leste
The Road Map- Annex 2
STABILITY PROGRAM
Republica Democratica de TimoFLeste Page 2 of 25
The Road Map- Annex 2
INTRODUCTION 4
STABILITY PROGRAM 5
Objectives 5
Scope 5
Governancearea 6
Stability area 11
Planningfor Poverty Reduction 13
PromotingHealth 19
Special Situationof the Enclave of Oecussi 20
INDICATIVE COSTS AND FINANCING MODALITIES 21
Indicative Costs 21
Financing Modalities 23
IMPLEMENTATION AND COORDINATION 23
RISKS 23
REPORTING AND MONITORING 24
STABILITYPROGRAM
RepGblicaDemocraticade TimoFLeste Page 3 of 25
The Road Map- Annex 2
INTRODUCTION
Timor-Leste formulated its first National Development Plan (NDP) in record time with the
participation o f more than 38,000 citizens from all walks o f life spread in all parts o f the
country. The Plan recognized that the people o f Timor-Leste needed virtually ewrything and
incorporated a wide range o f strategies, policies, programs and actions to address their needs
during the fiveyear period (2002/03 to 2006/07) within a twenty-year perspective. The Plan
was finalized in early M a y 2002 and adopted by the Parhment after independence.
Implementation o f the Plan began with the FY2003 budget in July 2002.
The Plan gave hope to the people about their future as well as that o f their children and raised
expectations. It recognized the likely direct and indirect adrerse impacts o f the reduction o f
the international presence due to the scaledown o f the UN operations in mid-2002 on the
demand for goods and services and employment. The unemployment rate was estimated to be
o f the order o f about 17%. The economy was estimated to contract by about 4.8% in 2002
and 6.8% in 2003 and recover somewhat (by 3.5%) in2004.
The actual situation may have been somewhat worse than projected. Employment, especially
in the urban areas and among youth, declined precipitously in thelatter half o f 2002 after
withdrawal o f a significant proportion o f the UNpersonnel. The country isfacing difficulties
in attracting foreign direct investment, and in rapidly creating an enabling environment for
private sector development. Also, the Government has not yet been able to address
adequately the provision o f social services for vulnerable groups. In general, dlivery o f
services has not expanded to meet the high expectations o f the people due to various factors
that included (i)capacity limititions and technical difficulties in putting in place the
necessary legislation and regulations supporting good governance, (ii)time absorbed in
setting up the administrative and service delivery systems, and (iii) o f prioritization and
lack
sequencing o f the activities in the NDP. The Government realized the constraints and began
(inOctober 2002) to see the needto refocus the development efforts on a limited number o f
priority activities. The events o f 4 December 2002 added urgency to address the imme&te
needs o f the people through tangible delivery o f goods and services that are visible to the
people.
Inthe semi-annual Meetingwith Development Partners heldduring 910 December 2002, the
Prime Minister alluded to the types o f priorities around whih the Government intended to
focus its efforts. In January 2003, these priorities were refined taking into account the
feedback from the people in both the urban and rural areas and a possible list o f immediate
priorities was shared with Development Partners in a meeting o n 21 January 2002. The
suggestions emerging from the Partners were taken into account in finalizing the immediate
priority areas, which were approved by the Council o f Ministers on 22 January 2003.
Eight immediate priorities in the three broad areas o f governance, stability and poverty
reduction have been identified and approved by the Council o f Ministers (Government) in
January 2003. The priorities are: in Governance area: (i)strengthening the respective
institutions o f the State and legitimizing the local authorities at the suco level first; (ii)
strengthening the administrative capacities o f the justice system including both customary
and formal systems; (iii)strengthening the capacities o f the institutions respnsible for
internal and external security (including appropriate equipment for communication and
transport for Police) and Defense; in Stability area: (iv) j o b creation, which will be part o f all
STABILITY PROGRAM
Republica Democraticade TimoFLeste Page4 of 25
The Road Map- Annex 2
programs from every sector, with particular emphasis on yodh and ex-combatants; and inthe
Poverty Reduction area: (v) supporting the development o f the agriculture sector to ensure
food security and enhanced access to markets & distribution in the family (farming) sector,
cooperative sector, private sector and private sector with the State's participation (joint
ventures); (vi) developing trade through cooperatives including domestic trade, import o f
basic products and export o f local products such as cumin and copra; (vii) improving primary
and secondary education and vocational training; and (viii) promoting health including
extension of access to basic health services through increasing the number o f mobile clinics
and / or health posts in inaccessible areas.
The Stability Program i s formulated in the prioriy areas to cater to the urgent needs o f the
population over the next 18 months. The Government's Prioritization and Sequencing
exercise covering the remaining four years o f the National Development Plan (NDP) takes
into account explicitly the above immedate priorities, which are in tune with the priorities in
the NDP. The Annual Action Plans for FY2004 draw upon the results o f the Prioritization
and Sequencing exercise. Thus, the activities in the Stability Program will form a subset o f
the `actions in the A A P s and an integral part o f the development efforts during FY2004. The
initial implementation o f the Program in the remaining three months (fourth quarter) o f
FY2003 is to be funded from reallocation o f resources from the CFET budget and other
sources while additional resources are being mobilized in the FY2004 combined sources
budget. This paper provides the details on the objectives, scope, indicative costs, financing
modalities, and implementation, coordination and monitoring arrangements for the Stabliity
Program.
STABILITY PROGRAM
Objectlves
The overall objectives o f the stability program are to restore and sustain civil and economic
security (including food security) and harmony in all parts o f the country and empower the
local communities and alministrations.
The criteria for selection o fprograms and activities indifferent sectors for incorporation in
the Stability Program include the following:
1. Address at least one o f the immediate priorities
2. Generate tangible and visible beneffiflows including improved and expanded delivery
o f services inthe next 3 to 15 months
3. Linkedto medium and longer-term priorities and programs
4. Sustainable in the medium and longterm from both fiscal and development
perspectives
5. Promote poverty reduction and overall economic growth
The stability program should be seen as the first step to recovery, poverty reduction and
accelerated economic growth in the medium and longterm. Good integrationbetween sectors
and programs, hitherto weak, is an important dimension to promote, especially under the
Stability Program. The programs under the different priorities are presented inthe following:
STABILITYPROGRAM
RepdblicaDemocratica de TimoFLeste Page 5 of 25
The Road Map- Annex 2
GOVERNANCE AREA
1. Strengthening the respective institutions of the State and legitimizing the local
authoritiesatthe Suco level first.
This would include strengthening the four organs o f the State - President, Executive,
Parliament and Judiciary - with appropriate assistance. In particular, strengthening the civil
service including legislation and pay policy will cceive priority. At the local level, election
o f the Chef de Sucos and strengthening the administrations at the subdistrict level will be a
priority. T o start in this direction, the Government has recently appointed 65 SubDistrict
Administrators to guide, facilitate and monitor development activities undertaken by the
Government, private sector, communities and civil society organizations. At the suco level,
the legitimacy o f the Chef de Sucos in the sucos numbering about 450, has to be clarified.
Also, in some sucos, more than one person claims to be the Chef de Suco. This needs to be
resolved. Election o f the Chef de Sucos i s seen as a means to resolve this problem and
legitimize the role o fthe Chef de Suco.
The appointment o f district and subdistrict administrators and the election o f Chef de Sucos
i s an important step. They need to be provided with resources to respond to the complaints,
concerns and priorities o f the people in the districts, subdistricts, and sucos.' The
Government will initi&e a block grants program to enable the suco, sub-district and district
administrations to respond to complaints and local priority concerns. Initially, the grants will
be modest. The funds could be used for eligible interventions such as minor repairs,
rehabilitation and upgrading o f public facilities including markets, roads, culverts, canals,
channels, schools and community halls, and to ameliorate calamities such as pests ad
livestock diseases?
The Decentralization Options study is to be launched in the latter part o f March 2003 and
completed by the end o f M a y 2003. Based on a review o fthe options, the Government would
consider the formation o f a local development fundthat would be administered within the
existing Government structures, with appropriate technical assistance to the Government'and .
other agencies. The Fundwould cater to the populations at the grassroots, especially the rural
residents, o n a wide range o f development priorities including employment generation,
agriculture, education, health and infrastructure.
2. Strengthening the administrative capacities of the justice system including both
customary and formal systemsto improve service delivery?
InAugust 1999, the judicial system inTimoFLeste had some 70 persons with legal training.
By 2000, after some intensive training, 25 judges, 13 public prosecutors, 10 public defenders
and 12 registrarsklerks were appointed by UNTAET o n a probationary bask4 Today there
are 17 trial judges, 6 investigating judges, 9 public prosecutors and 9 public defenders
' The Chefes de Suco are provided a modest monthly allowance to cover the costs o f travel, etc., for them and
their colleagues from the aldeias, to attend meetings at the subdistrict and district headquarters.
A list of eligible activities will be prepared in consultation with the people in;acho f the districts to cater to
their specific circumstances.
The presentation inthis subsection draws heavily on the Joint GovemmenbUNDP Assessment Mission (draft)
Report on "Support to the Justice SysteminTimor-Leste," Dili, 26 January 2003.
These figures do not take into account the number o f international judges, prosecutors and public defenders
appointed that were mostly assigned "Serious Crimes" cases.
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operating in four district courts (in Dili, Oecussi, Baucau and very recently in Suai). Apart
from these state employees, there i s still a general death o fjurists inthe country - a shortage
that i s likely to continue for some time. In addition, the UNTAET established Special Panels
for Serious Crimes as part o f the Dili District Court.
The service delivery in the justice sector has encountered conderable problems giving rise
to (i) a mounting backlog o f unresolved cases: inconsistent rulingsand illegal orders by the
courts; (ii) the frequent ignoring o f legal orders issued byjudicial authorities; (iii)relatively a
large prison population with a majority awaiting trial! (iv) inadequate legal assistance to the
accused; and (v) low quality o f services, among others. The factors contributing to this
situation include
a. Capacity and Complexity aspects
d Inadequate number of judges, prosecutors, public defenders and court clerks and
insufficient preparation (legal capacity) o f these personnel;
6 Insufficient sufficient support services including interpreters, translators and record
keeping;
d Transition fromaBahasabasedIndonesianlegalsystemtoaTetunandPortuguese-based
national, civil law system and associated language difficulties;
d Lackofuniformityinproceduresandweakcasemanagementpractices;
d Difficulties instrikingabalancebetweenissues regardingabuses ofthe past; immediate
needs inthe period o f transition; and medium and long-term development o f an effective,
independent, professionalized justice system operated by skilled professionals o f highest
professional integrity;
Limited facilities and equipment;
6 Gapsandinadequacies nexistinglaws;
d Lack of community awareness of the judicial process and the rightsprotected by the
judicial system and the Constitution;
b. Management and Institutional aspects
d Difficulties in striking a balance between exercise of authority in the ini-rest of
accountability and real or perceived interference with the independence and autonomy
among the institutional components o f the justice system;
For example, records maintained by prosecution administration staff indicate that frodanuary to November
2002, 1285 cases were reported to the ordinary crimes Public Prosecution Service office. There i s some concem
regarding the accuracy o f this information, as efficient case management systems are not currently in place in
the ordinary crimes prosecution office. Of the total 1,285 cases reported from January to November 2002, 377
cases were solved by mediation and did not proceed through the formal court system. Despite frequent use of
mediation to resolve criminal cases, there i s no regdation or statute in Timor-Leste authorizing the use of
mediation to settle such matters. Indictments were filed in only 140 cases. O f these indicted cases, the courts
have so far finalized only 43. It should be noted that these figures do not include case from 2001 that have yet
to be indicted or tried. Some estimates put the total backlog of unresolved cases to be in excess o f 2,300. At the
Court of Appeal, currently there i s no President and the Court i s comprised o f only one probationary judge. As a
result, it has temporarily ceasedto function leading to a backlog o f 39 cases inOctober 2002.
There are three prisons operating in Dili (Becora Prison), Baucau, and Gleno. In October 2002, the prison
population was estimated to be about 292 o f whom 207 prisoners (7 1%) were awaiting trial. O fthose awaiting
trial, 79 prisoners (38% o f the pretrial population and 27% o f the total prison population) were held without
warrant.
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& A general atmosphere oflack oftrust, confidence andwillingness to communicate, much
less cooperate, among the institutional components o f the justice system;
& Tensions betweensome nationals and internationals working inthejustice sector.
The Ministry o f Justice has made considerable progress in establishing the institutional
structures including the (i) Superior Council for the Judiciary, the Court o f Appeals and four
District Courts; (ii) Office o f the Prosecutor-General, (iii) o f the Public Defender, and
Office
(iv) Judicial Training Center. Most o f these are in the early stages and need substantial
technical assistance to fully function.
The Ministryhas formulated plans to strengthen the capacity o f the various institutions inthe
Justice sector, which i s likely to generate benefits, including improved service delivery, inthe
medium and longterm. Inthe short-term, it is necessary to improve the delivery o f services
including especially the resolution o f the backlog o f cases and the high proportion o f
detainees awaiting trial for very long periods (many held well beyond the legally allowed
d~ration).~This cannot be handled by the formal justice system with the present complement
o f Timorese professionals and it will be necessary to seek help from international personnel
inthe short and mediumterm. The specific activities inthe Justice sectorin the Stabilization
Program will include the following:
6 Recruitadditionalstaffto filltheauthorizedpositionsintheMinistryofJustice;
& Train Judges, Prosecutors and other personnel inPortugal and other CPLP (Comunidade
dos Paises de Lingua Portuguesa or Portuguese-speaking) countries and in countries that
adopted and practice Civil Law;
6 Recruit international Judges, Prosecutors, Defense Lawyers and Court Clerks from
countries that adopted and practice Civil Law to work together with Timorese colleagues
inteams inhandlingthe work-load while some o fthe other Timorese personnel are away
on training and reduce the backlog o f cases;
Provide additional interpretation and translation services to support the smooth
functioning o f the courts;
& Provide additional assistance for mediation: for example to assist the proposed
Commission to resolve land rights inthe districts;
6 Promotethe use offunctionalregistries for selection andtracking ofcases, andadequate
filing systems;
6 Improve internal reporting systems in each entity including the Courts, Prosecutor-
General's Office, Public Defender's Office, Prisons and the Ministry;
& Formulate necessary regulation(s) to allow for resolution of the less serious and minor
cases through mediation;
6 Strengthen the mediationand resolution mechanisms (including the customary ones) at
the national, district, subdistrict and community levels;
6 Recruittrainers (from Malaysia) to train Timorese trainers to continuetrainingofprison
guard^;^
& Help provide vocational training for detainees in collaboration with public and private
vocational training centers;
'In October 2002, about 77% of the prison population (total of about 207 prisoners) was awaiting trial. Of this
number, 79 prisoners (38% of the pretrial population and 27% of the total prison population) are held without
warrant.
* Already,an adviser is providedby the Canadian Intemational Development Agency (CIDA) to assist th&and
and PropertyUnitinthe Ministry of Justice on mediationof land andproperty disputes.
About 170 prison guardpositions were authorizedofwhich about 120has beenrecruited.
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k5 Provide literacy classes to illiterate detainees, possibly using as teachers other detainees
with secondary schooling;
.6 Organize work programs for detainees to upgrade their skills and produce goods and
services that could contribute to their upkeep; and
Jointly with the Ministry o f Education, Culture and Youth and the media (including Radio
Timor-Leste), organize civic education on nationality, citizenship, essentialelements o f
civil and penal code, land law, and rights and obligations o f citizens.
3. Strengthening the capacities of the institutions responsible for internal and
external security (including appropriate equipment for communication and
transport for Police)andDefense.
The institutions responsible for internal security include the National Police of Timdeste
(PNTL) and the UN Police, while the Defense Force (FFDTL) and the UN Peace-Keeping
Forces or PKF are responsible for external security. In ddition, the National State Security
Service (Servico Nacional de Seguranca do Estado or SNSE) employing about 18 staff i s
involved in intelligence collection. Further, a cadre o f unarmed Civil Security Guards
numbering some 300 are deployed throughout the country to guard public buildings, facilities
and property.
The Constitution o f Timor-Leste stipulates that internal security is the responsibility o f the
Police and external security the responsibility o f FFDTL. The main goal o f the police
(PNTL) is to provide service to the people and communities through protection o f personnel
and property, ensuring compliance with all laws, preventing crime and maintaining public
order. The full strength o f (ETPS) PNTL was indicated to be 3,500 inthe FY2001/02 bdget
document. In light o f the capacity and resource constraints, the FY2002/03 budget document
targeted to mobilize a total o f 2,830 officers during FY2002/03!' In addition, provision has
been made to recruit 25 cadets for the newly created Immigration Police Unit.The P N T L has
already recruited and trained about 2,530 officers and another 325 cadets are to be recruited
and trained during the rest o f FY2003/03. In addition to normal police work, the PNTL's
responsibilities include border patrol and immigrtion. The Border Patrol Unit (BPU) was
activated in June 2002 to enforce laws and regulations along the borders and ports, establish
rapport and maintain liaison and cooperation with counterparts, and assist the Defense Force
(F-FDTL) in cases o f externalthreats. The BPUhas 200 officers o f whom 174 are deployed
inthe three border districts- Bobonaro (75), Cova Lima (46) and Oecussi (53)- with the rest
at headquarters in Dili. The Immigration Police Unit too has been activated and the officers
deployed alongside the border patrol in the border districts and at Comoro Airport and the
Port in Dili. A Special Police Unit (now converted to the Rapid Intervention Unit or MU)
with 180 officers, o f whom 120 are in Dili and 60 in Baucau, has been set up to respondto
public/civil disorder situations and tactical responses, primarily inthe two urban center$.'
loThis gave rise to some confusion regarding the authorized strength of the NPTL.
I'The Special Investigation Unit has been converted to the Rapid Intervention Unit.The responsibilities o f the
Unitinclude crowd control, not control and management during outbreaks ofmassive civil disorder, control of
protest actions by crowds, control of passive protest and clashes between rival gangs; and tactical response
actions including assistance to SNSE during VIP outer layer escort, provision of initial response to bombing
incidents, tackling barricaded armed criminals, assistancein apprehending violent armed criminals including
through house entry and assault, mass arrest and escort of suspects, tackling hostage situations, responding to
prison outbreaks and prisoner escape, and search and rescue operations during mishaps.
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Recent incidents in Los Palos and Ermera (Atsabe) were handled through the deployment o f
F-FDTL to restore order. However, there is a consensus that the F-FDTL should not be
utilized to deal with internal security problems!2 Instead, a Rapid Deployment (Police)
Group (RDG) o f about 500 officers will be set up to address the internal security concerns in
the Districts, such as the recent incidents in Los Palos, Ermera and Maliana. The RDG
concept replaces the previously proposed Border Patrol Unit Specialist Response Team. Of
the 500 officers in the RDG, 300 will be recruited and trained in FY2003 and the rest in
FY2004. The RDG will be deployed in designatd districts experiencing highrisk security
threats.
The allocation for the PNTL in the approved budget for FY2002/03 was US$7.8 million.
Funding for the BPU and RIUwas incorporated in the above budget, although the amounts
allocated for these units may not be adeq~ate.'~ Funding for the recruitment and training o f
the 300 RDG officers is included in the revised FY2002/03 budget (following the MiWear
Budget Review). Preliminary estimates indicate that it might cost around US$5 million to set
up and equip the 500-strong RDGand the recurrent costs will be significant.
The Defense Force (F-FDTL)was established in January 2001 with an authorized strength o f
1,500 regular forces and 1,500 reservists. By early 2003, the actual strength has reached
about 1,400 regular forces organized into two battalion^'^ and command and headquarters
staff, There has been no recruitment o f the reservists so far. The mission o f FFDTL i s to
defend Timor-Leste. Three overarching principles guide the achievement o f this missionji)
the country's military strategy be defensive, (ii) the Force be capable o f defending against
small-scale incursions by hostile groups and o f larger invading forces until external assistance
arrives, and (iii) support the Government duringnatural dissters and other emergencies. The
development of the F-FDTL has been occurring gradually and slowly with assistance from
bilateral donors. However, there is considerable need for strengthening the forces with further
training to renew the skills as well asprovision o f additional equipment and facilities.
The mandate o f United Nations Police i s to maintain law and order in TimorLeste and
establish and train a professional National Police Service. The maximum authorized strength
was 1,640 officers. In April 2002, there were 1,287 UNPolice officers from 38 countriesof
whom 239 officers were in the Special Police Units in Dili and Baucau. The downsizing
policy o f the UNPolice involves a gradual handover (transfer) o f the police functions in the
District to the National Police with a concomitant decrease in the number o f international
police officers. Thus, by early 2003, the police functions in five districts were handed over to
PNTL and the number o fUNPolice officers has declined to about 700. Further wthdrawal o f
the UNPolice will be suspended and their numbers may be maintained at those prevailing in
MarcWApril2003 untilthe end o f December 2003.
Recently, the Border Police Unitshave been deployed in the border areas in Bobonaro, Cova
Lima and Oecussi Districts and are patrolling the borders sideby-side with the UNPKF. As
l2 The Constitution ofTimor-Leste mandatesthe use of F-FDTL to address external threats.
l3 For example, the budget allocations and projections from FY2003 to FY2006 for the BPU are significantly
lower than that required (e.g. to establish offices and housing andacquire additional equipment) for it to assume
full responsibility for border security from the PKF.
l4 The 1'' battalion is located intemporary facilities previously occupied by the PKF inthe Los Palos region and
will move to the permanent facilities nBaucau after their refurbishment is completed. The TdBattalion, which
i s at the Training Center in Metinaro, will move into the temporary facilities (to be) vacated by the 1' Battalion
inLos Palos, untila permanentbasebecomes available.
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with the UNPolice, the schedule for further withdrawal o f the UNPKF will be deferred and
their numbers maintained at the prevailing level until the end o f December 2003. H o w e r ,
the BPUwill continue to operate sideby-side with the PKF in the border Districts. The BPU
do not have adequate supplies (e.g. boots and uniforms), equipment (e.g. communications
equipment, pepper spray, holsters for pepper spray, small arms and rifes), housing and
furniture (e.g. beds) and tran~port.'~These need to be procured and supplied immediately to
the BPU.
At the time o f independence in May 2002, the security situation in TimorLeste has been
relatively stable and the incidence o f crime wa low. The situation has deteriorated somewhat
since then brought about largely by the economic downturn. The circumstances worsened in
the first two months of 2003 with, among others, armed insurgency incidents. It is understood
that further reductions inthe UNPolice numbers and the withdrawal o fUNPKF will proceed
inclose observance o fthe law and order situationand social stability inthe country.
Inorder to be fully functional and fulfill its mandate, the PNTL needs support, among others,
in the areas o f training, management including human resources management, additional
equipment and facilities. Adequate resources will be made available to meet the urgent needs
through reallocation inthe FY2003 budget and through the combined sources budget (CFET,
TFET and Bilateral sources) to meet these requirements over the next.four years.
STABILITY AREA
1. Job creation will be part of all programs in every sector, with particular
emphasis on youth and ex-combatants.
It will include employment intheprivate sector and inthe informal sector as well as training
including vocational training, with particular emphasis on youth and excombatants.
Examples o f activities include (i)promotion o f the private sector through such enabling
legislation as investnent and company laws on the one hand and rigorous implementation o f
existing regulations and laws including the new land law on the other, (ii) negotiation o f
preferential trade arrangements with main trading partners and/or major markets including
Australia, and (iii)development o f tourism and offshore fisheries through foreign direct
investment andjoint ventures.
Other sources of demand for labor inthe economy would be rejuvenated as well. One avenue
i s the introduction o f "domestic content'' requiremnts for successful bidders that provide
out-sourced goods and services to the Government. The purpose i s to require the successful
bidders to add value domestically through training and employment o f staff/labor and perhaps
use some locally made products. A second avenue is to adopt policies that encourage
development partners to subcontract to the maximum extent feasible the civil works
components o f their aid programs to local contractorshusinesses. A third option is to request
development partners and require line Ministries to tender civil works under a set o f
procurement rules that give generous preference to local contractors and/or foreign
contractors that have partnerships with local contractors. For example, local contractors may
Is Information collected from field visit to Junction Point 3 InOecussi.
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-
be given a 30% preference in procurement while foreign contractors partnering with local
contractors may receive a 15% preference.I6
A further initiative will encourage the oil and gas industry to utilise local materials and
workers during the construction phase and source the supply o f produce ( h i t s , vegetables
and fish) to the offshore o i l and gas workers from TimoreLeste. Further, the oil and gas
companies would be encouraged to develop other enterprises that would have forward and
backward linkages, which would be n the long-term interest o f these industries and
demonstrate the social responsibility o f these companies to the people o f TimorLeste. A
further initiative would involve inviting select groups o f investors to discuss and develop
niche areas such as in trade (e.g. organic coffee, sandalwood and other exotic products) and
tourism including ecetourism.
Inpublic infrastructure, employment creationwill be promoted through
a Maintenanceofprimaryroads,rehabilitationandmaintenanceofsecondaryroadsand
construction and maintenance o f farm to market roads using labour-intensive technologies
and with community participation;
a River-trainingtoprotectbridgesandroadsandreducedamageduetofloods;
a Otherinfrastructurerehabilitationandconstructionincludingpublicbuildings,schools
and community centers; and
a Expansionandimprovementofwater, sanitationandenvironmentschemes.
Government would create the enabling environment including policies and incentives with
private, sector, NGOs, Church, communities, groups and individuals implementing the
activities. An inter-ministerial group for employment creation would be created to coordinate
the activities.
a. Technical and Vocational Training
Currently, the responsibility for vocational trairing is spread across the Ministry o f
Education, Culture, Youth and Sports (MECYS) and the Secretary o f State for Labour and
Solidarity (SSLS). M E C YS should provide technical training such as in engineering towards
diplomas and degrees to expand the pool o f skilled personnel in the medium and longterm;
while SSLS will promote provision o f vocational training (lasting between a few weeks to a
few months) by capable local institutions (e.g. D o n Bosco Center). The need for training in
different areas will be &ermined by employment and livelihood opportunities inthese areas
(i.e. demand driven). Training to youth in organization and management o f road maintenance
and rehabilitation operations will be undertaken.
A Vocational Training Council would be establihed to undertake coordination, set standards,
certification and regulation. Incentives would be provided for private sector including
contractors to provide training. Trainees would be provided support including credit to build
businesses individually andin groups/cooperatives. The private sector will be supported
through training o f managers o f small and medium enterprises (SMEs), business associations
and others.
l6Variations on this have been or are a common practice in many developing countries in the AsiaPacific
Region.
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M u c h o f the training will be implemented through existing NGO, Church and other
organizations, which will be strengthened. In the mediumterm, Government will develop
policy for investment, laws and regulations on land and property, and a national policy on
employment.
b. Communications and credit services willbe improved through
6 Provisionof aradio-receiver setwithsolarbatteriesandamegaphonetoeachaldeia;
Supply of two-way radios to sucos, sub-districts and districts for multipurpose use
including for administration, health emergencies, security and disasters; and
6 Expansion of the Postal Systemwith savingdmoney disbursement facilities initially to
each district and later to all subdistricts as a means to facilitate mobilization o f savings,
disbursement of funddcredit, collection o f repayments and provide other financial
services (e.g. money-orders). These would work as defacto financial intermediaries until
such time that commercial banks expand to these areas.
In addition, the Government has initiated the Open Governance Program under which the
Council o f Ministers spend Tme (between one and two weeks) in each district talking and
listening to the people, familiarising with the challenges and opportunities o n the ground, and
exploring means to address the priority concerns o f the people.
PLANNING FOR POVERTY REDUCTION
1. Agriculture
Supporting the development of the agriculture sector to ensurefood security and enhanced
access to markets & distribution in thefamily farming) sector, cooperative sector, private
sector andprivate sector with the State'sparticipatiar (joint ventures)
Poverty in Timor-Leste i s primarily a rural phenomenon with almost ninein-ten poor located
in rural areas. Supporting the development o f the agriculture sector to ensure food security
and enhanced access to markets and distribution wil be an important means to poverty
reduction in the short-term. This will include support to family farms:' cooperatives, private
sector andjoint venture enterprises.
The agriculture sector suffers from several handicaps including low access to inputsminimal
extension services, virtually no credit supply, rudimentary poslharvest facilities and
practices, poor quality o f produce and uncompetitive prices. The coffee and coconut
plantations are old and not well maintained. Utilization o f other produce (eg. coconut)
through appropriate processing i s minimal. Certified seed imported from Surabaya was not
good. The Ministry o f Agriculture, Fisheries and Forestry (MAFF) are working with farmers
to produce seeds. Although some irrigation systems have been rehbilitated at considerable
expense, no significant increase in production o f rice has materialized due to competition
from imported rice and inadequate extension and inputs supply. Improving yields and post
harvest processing are important to enhance the competitiveness o f domestic rice.
l7More than 85% of food productioni s from household(family) farming.
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Recognizing the challenges, the Government established the agricultural research and
extension service only last year and a Horticulture unit i s being established. Although the
MAFF suggested the development o f cooperatives, markets and transport to the Small
Enterprise Project or SEP (funded through TFET), no action has been taken so far. Similarly,
replanting coffee to allow for intercropping at least during the initial three years was
proposed to SEP, with no follow-up so far. The World Bank has been requested to assist in
obtaining information on markets for niche products.
Some foreign private investors have expressed interest in replacing coconut with oil palm.
Some Japanese and Korean firms as well as some Thai andHong Kong (China) investors are
interested in the fisheries sector. The companies/investors will also develop infrastructure
including storage and processing. The University o f Hawaii has been asked to help on
mungbean and other agronomic aspects (under USAID support). In collaboration with the
NCBA, which is doing good work on coffee and vanilla, planting o f vanilla o n 80 ha is being
implemented. The Ministry has authorized import and distribution o f Bali cattle to 500
families in Liquica, Dili and M a n a m districts. Cattle-raising in Oecussi, which i s a
traditional activity inthe district will be improved as well.
Buildingupon the above initiatives and experiences o f MAFF and others inthe public, GO
and private sectors, the following activities ~411be promoted under the Stability Program:
6 Coffeeplantationrenovation throughreplantingofnewcoffee crops
6 Establishingandimplementingandrevolvingruralcredit system
6 Stabilizationofrumofriver system's for irrigation
6 Increasing rice and vegetable production through access and utilization of fertilizer in
irrigated areas
6 Improvingthe storage processingandmarketingoffoodcrops
6 Promotecattleproduction-Cooperative
6 Promotingdairy cooperatives
6 Trainingyouthformanagingcooperatives insucosandpostos
a Promotingforestre-planting
6 Developingoffshore fisheries utilizingforeigninvestment
6 Improvingthe storage andmarketingoffish
6 Promotingthereplantingofnewcoconutvarieties inagriculturallyneglectedareas
6 Developingoilpalm(nucleusestate) plantations, incooperationwiththeprivatesector
6 Procuringanddistributingoilextractionmachine for copraandcandlenut to cooperatives
and farmers' groups (pilot project)
6 Developingtradethroughcooperatives, includingdomestic tradqtheimportofbasic food
products, and the export o f localproducts
6 Animaltraction
6 DevelopmentofAgro-tourism
6 Development of valueadded agriculture product for domestic market and possibly for
export
6 Community irrigation
2. Food Security
Food security can be considered at the national, district, community and household levels. At
present, Timor-Leste imports about 40% o f its rice and a substantial proportion o f cooking oil
and other foodstuffs. The country aims to meet its food requirements through a combination
lg( STABILITY PROGRAM
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The Road Map-Annex2
o f domestic production and imports. Food security at the district and community levels is
often seen in terms o f availability o f adequate supplies. At the household level, food security
involves the availability o f adequate food (supply) at reasonable prices and the ability to buy
the available food (income). Increasing production contributes to increased availability
(supply) and incomes. However, many households do not have adequate incoma to buy the
food and seasonal hunger is a common phenomenon throughout the country.
Timor-Leste received some food aid (mainly rice, cooking oil and canned fish) and has been
distributingthis to the people duringthe leanmonths. However, the supplieswere limited and
inadequate to meet fully the requirements. Virtually all the stocks have been depleted and the
Government will seek additional food aid to address hunger.
3. Cooperatives
Developing trade through cooperatives including domestic trade, import of basic products
and export of local products such as cumin and copra
Promotion o f trade within the country including through construction o f markets and
warehouses. This would include promotion o f cooperatives to undertake import o f basic
products and exports o f local products drawing upon such successful examples as in coffee.
Training will be provided to youth and excombatants inthe organization and management o f
marketing, production and other service (e.g. eco-tourism) cooperatives. Credit cooperatives
should be developed later on buildingupon the successful experiences o f the marketing and
other cooperatives. Seed capital for the operation o f the cooperatives would be mobilized
from the commercial banks, where feasible, and other sources ncluding the Postal System in
due,course.
For import and export trade, the cooperatives would establish linkages with their counterparts
inother countries, and seek partnerships for mutual benefit.
4. ImprovingEducation
Improvingprimary and secondary education and vocational trainind8
Improving primary and secondary education including increasing access as well as improving
quality i s an immediate priority. Also, delivery o f vocational training that has a direct link to
employment i s a priorityunder the Stability Program.lgThe background and actions o n these
areas are discussed in the following.
Increased access to primary education has been identified as one o f the immediate priorities.
Almost half the population o f Timor-Leste i s below 16 years old2' and the demand for
primary education will grow exponentially as the population dynamics work out. There has
This subsection draws heavily on the analysis presented inthe final report of the Household Living Standards
Measurement Survey or LSMS(2001), which is one of the three components of the Poverty Assessment.
l 9 It i srecognized that employment generation could dso be promoted through supply side interventions in
certain areas of vocational training (supplydriven). However, it is difficult to identify the areas and the initial
thrust will be demaddriven.
*" According to the HouseholdLSMS(2001), about 47% ofthe populationi s below the age of 16 years; andthe
Multiple Indicator Cluster Survey (MICS) conducted in the latter half of 2002 estimates that about half the
population are aged 15 or lower.
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been a significant increase in primary school enrollment overall and by the poor and girls in
particular duringthe past two years, most likely due to abolition o f school fees, requirements
for uniform, and mandatory Parent-Teacher Association (PTA) contributions, as well as the
distribution o f free textbooks on the one hand and improved security o n the other. This
indicates that household demand for education is potentially strong and the Government i s
doing the right thing in expanding access to primary education through the rehabilitation o f
(old) schools and construction o f (new) schools.
Notwithstanding the recent increases in enrolment the percentage o f out-of-school children
between 5 and 17'l i s still high and follows an elongated Upattern (see chart below). The
proportion declines from a high o f 86% among 5year olds to 67% or two-in-three among 6-
year olds, 42% among 7-year olds and 35% among 8-year olds; to lows o f 12.5% among 11
and 12-year olds and 11.5% among 13-year olds. The trend reverses thereafter and the
proportion increases to 42% among 17-year olds, more than 60% among 19-year olds and
more than 80% among 2 1-year olds.
I Out of School Children and Youth by Age, 2001
100
80
60
40
20
0
The gross enrollment ratio inprimary schools i s high(102%) due to oveFaged students. Most
Timorese children, especially in rural areas, start school late at age 7 or later largely due to
the difficult access (walking disbnce o f more than one hour from home to the nearest
school). The net enrolment rate is only 64% ifthe starting age i s at 6 and 73% if the starting
age is at 7; that is, between one-in-three to one-in-four children o f school age are not in
school. Therefore, in spite o f the increase in enrollment in recent years, a large number o f
children are still not in school, most o f them 6 and ?year-olds. The late start and the entry
into the school system o f those who did not enroll inthe school years 1998199 and l999/2000
due to the insecurity and turmoil have resulted in the vast majority o f students being oveF
aged for their grade. The years o f schooling for latestarters are shorter than those who start
earlier (e.g. at age 6) as they reach adolescence and start leaving school. They are learning
very l o w skills. Further, the highrepetition (over 20 %) and dropout (10%) rates per grade in
primary education result in substantial wastage and high cost per graduate. Although the
gross primary enrolment ratio i s high(102%), only two-in-three students reach grade 4 and
about one-in-two reach grade 6. About 47% of those entering grade 1 complete grade 6; or
more than half the students that enter the primary school (grade 1) drop out without
completing grade 6.
These are the relevant age groups for early childhood develqment (5-year olds), primary education(6 to 11-
year olds), junior secondary education(12-14 year-olds) andsenior secondary education(1 5 to 17-yearolds).
STABILITY PROGRAM
RepublicaDemocraticade TimoFLeste Page 16of 25
The Road Map-Annex2
The objectives are to encourage the enrolment ofthose who are still not inprimary education,
starting with the 6-year-olds and progressively involving the 6year-olds; continue to align
age by grade by encouraging new comers to start at age 6 and by reducing Repetition(but not
automatic promotion); reduce dropout o f existing students and make sure that they complete
the primary cycle; and ensure that students become literate and numerate by the end o f the
primary cycle.
According to the findings o f the 2001 Suco Survey (Census), public schools (all levels)
accounted for about 78% ofthe total (of 992 schools in2001) with 19% o f the schools runby
the Church, 3% by private operators and less than 1% by others (civil society organizations
includingNGOs and comunities). Primary schools accounted for 82% o f the total, with
11% junior-secondary and 3% senior secondary schools. About 4% o f the schools were not
classified inthe Suco Survey (Census)
a. Primary Schools
Public Schools: The Prioritization and Sequencing exercise in the Ministry o f Education,
Culture, Youth and Sports rightly gives priority to expansion o f primary schooling through
the rehabilitation and construction o f more than 65 primary and presecondary schools, four
Escolas Basicas and 7 Nucleus Schools (serving surrounding schools for improving quality),
expansion o f teacher training, and revision o f curriculum (to begin in March 2003). At the
same time, it i s recognized that this would not be adequate to meet the increasing demand for
primary education.
Private/CommunitySchools: Private groups includingcommunities have started a number
of schools to provide education for their children. Often, these are in areas where access to
public schools is difficult. Many o f these schools have inadequte basic facilities (e.g. desks,
tables, chairs and blackboards), textbooks and supplies. Most o f the teachers are not trained.
The fact that the private groups and communities have started these schools is a clear
indication that the demand for education i s high. The Government will assist these
private/community schools with textbooks, essential facilities and supplies. Also, the teachers
in these schools will be provided shoflterm training through the Nucleus Schools and other
facilities.
At the same time, in isolated and remote communities (aldeias) that lack adequate access to
primary schools, the Government will encourage the communities to set up community
schools with the help o f two or three youth (people) from the area that have at least some
secondary schooling. These community schools could admit 6, 7 and 8year olds and teach
from grades one to three. Upon completion o f grade three in these schools, students should
have adequate academic preparation and physical stamina to walk to the nearest pblic school
inthe area and continue ingrade 4. As inthe case o fexisting private/community schools, the
Government will assist these community schools in isolatedremote communities (aldeias)
with textbooks, essential facilities and supplies; and provde short-term training to the
teachersworking inthese schools through the Nucleus Schools and other facilities.
Church-run Schools: According to the 2001 Survey (Census) o f Sucos, more than 15% of
the primary schools are run by the Church. They provideaccess to quality schooling for a
significant proportion o f the children including especially the poor. The Ministry of
Education, Culture, Youth and Sports have beenproviding support to these schools through,
among others, supply o f textbooks and payment o f salaries o f some teachers. Recently, there
STABILITY PROGRAM
Repdblica Democratica de TimoFLeste Page 17 of 25
The Road Map-Annex 2
has been some concern about the lack o f resources to continue this support (especially
payment o f teachers' salaries) to the Church-run Schools. If required, additional resources
will be allocated under the StabilityProgram to continue the support to Church-run schools.
b. Secondary Education
The high gross enrollment rate in primary due to oveFaged students (102%) declines
precipitously to 48% injunior secondary and 26% in senior secondary schools. Iftk starting
age is at 7 as i s the current practice, the net enrollment rates are 73% in primary, 25% in
junior secondary, and 17% in senior secondary. Ifthe starting age i s at 6 as proposed, the net
enrolment rates are 64% in primary, 16% injunior secondry, and 7% in senior secondary.
Repetition and dropout rates are high injunior secondary as in primary education. There are
no great differences between boys and girls, although girls are more persistent in schools with
lower repetition and dropout rates and higher promotion rates. Senior secondary education
has lower dropout and repetition rates than primary and junior secondary because students
who move up to that level are more persistent and also tend to come from wealthier families
who do not need their labor to support the family. The Government i s trying to address this
issue with the involvement o f communities includingthrough ParentTeacher Associations.
Public Schools: The Ministry will continue to improve access to secondary education
through expansion o f capacity and provision o f scholarships to students from poor families
including orphans and exombatants (veterans). This would enable older primary school
children with necessary skills to enroll in the grade suitable for their age injuniosecondary
education, who hitherto were unable to do so due to a shortage o f space and teachers injunior
secondary schools. It would help maintain the transition rate from primary to secondary to
accommodate the increasing number o f students coming out ofprimary education; eventually
provide education opportunity to adolescents; and preempt the problems o f youthat-risk
(which would have implications for crime and violence and for public expenditures on police
and correctional services).
At the same time, improvements in the quality o f secondary education through teacher
training and more relevant curriculum will be pursued in order to impart the necessary skills
and attitudes that would make them productive citizens.
Church-run schools: These schools play a relatively larger role in secondary education, both
in terms o f quality and quantity, as compared to that in primary education. Government
budgetary constraints are a significant factor incontinuing support to these schools. However,
the option o f providing extra spaces to cater to the increasing demand for secondary
education, including those that may be forced to move to public schools due to a decline in
Government support to Church-run schools i s recognized. Accordingly, additional resources
will be located to assist the Church-run schools with textbooks, supplies and teachers'
salaries.
c. VocationalEducation
There are two Government operated Vocational Training Centers in the country - one at
Becora (in Dili) managed by the Ministryo f Eduation, Culture, Youth and Sports (MECYS)
and the other at Tiba (on the outskirts o f Dili),which is managed bythe Secretary o f State for
Labour and Solidarity (SSLS). In addition, there are a number o f other Vocational Training
Centers operated by Church groups and NGOs, some o f which are being utilized for training
STABILITYPROGRAM
RephbiicaDemocrbticade Timor-Leste Page 1a of 25
The Road Map-Annex 2
by the SSLS. Further, there are a few Agricultural Training Centers including the one at
Natabora, which are managed by the MECYS in cooperation with the Ministry o f
Agriculture, Fisheries and Forestry. The focus o f MECYS will be on providing technical
education offering diploma and degree courses to improve the skills o f the Timorese in the
medium and longterm. At the same time, the SSLS will focus on improving vocational skills
through short-term vocational courses (ranging from a few days to a few months) in
collaboration with the private sector and civil society organizations.
d. Adult Literacy
The adult population of Timor-Leste has a low level o f education and about 46% o f the
population o f all ages has never attended school. Among the age group o f 1929, 31% has
never attended school. Among the age group o f 30 and above, 72% has never attended
school. Among the 19-29 age group that have attended school, 15% have completed Grade 6,
14% Grade 9, and 26% Grade 12. The rates vary among income classes, with those
completing Grade 12 ranging from a low o f 12% for the poorest 20% to a higho f 32% for the
richest 20%. Very few go beyond Grade 12, except the richest.
Among the 30 plus age group, 20% completed Grade 6, 13% Grade 9, and 23% Grade 12.
The grade level completed by the largest percentage among the poorest is Grade 6; for the
richest, it was Grade 12. Almost half (49%) the total population cannot either read or write.
More than one-in-three (37%) o f those who claim to be able to read have difficulty reading.
The younger age group i s more literate due to higher levels o f educational attainment.
Recognizing that adult literacy is an important ingredient for improving productivity and
reducing poverty, the Government has initiated adult literacy programs. However, these have
encountered problems due, among others, lack o f adequate resources and teachers and high
dropout rates. The MECYS intends to rejuvenate the adult literacy programs and extend
literacy classes in tandem with other livelihood skills training (e.g. weaving, agriculture and
animal husbandry). Further, support will be provided to communities to organize adult
literacy classes using educated youth in the communities/areasas teachers. Also, civil society
organizations will be encouraged and supported to organize, continue and expand their adult
literacy programs.
PROMOTINGHEALTH
Extension of access to basic health services through increasing the number of mobile clinio
and/or healthposts in inaccessible areas.
The objective is to bring services closer to the people and respond to their most frequent
complaints. The existing benchmark for access i s a maximum o f a twehour walk to reach the
nearest health facility. People claim that they don't get such access.
At present, the number o f health personnel is limited, as are transport facilities. Under the
circumstances, two main options will be considered. The first involves increasing the number
of health posts (fixed facilities) and the second, increasing the number o f mobile clinics. The
latter may not work in the rainy season. One possibility i s to phase out mobile facilities,
replacing them with fixed facilities. This may be carried out gradually in the medium and
long-term. It has significant implications for capital and operating costs. The Ministry o f
Health is inthe process of replanning the available resources.
STABILITYPROGRAM
RepublicaDemocraticade TimoFLeste Page 19of 25
The Road Map- Annex 2
Some proposals for consideration inthe Health Sector inthe Stability Program are:
.6 Community-based health services to be provided by trained community healthworkers,
who could be youth or young adults with some education. They would receive short-term
training in diagnosing and administering to common (minor) ailments such as cold, cough
and fever. The activity should be promoted through Church or civil society organizations
to avoid the risk o f getting the community health workers (para-medics) o n the
Government payroll. There are some successful pilot experiences in Aileu, Same and
Liquica on these types o f activities which may be suitable for replication in other
areaddistricts. Church organs and other civil society organizations will be supported to
prepare communities. Ministry o f Health personnel, in collaboration with Church and
other civil society organizations with appropriate capacity, will provide basic training to
community health workers. Ministry o f Health will supply Health Kits to the community
health workers and replenish them as appropriate.
6 To improve the mobility of existing healh personnel for service delivery, additional
transport facilities such as horses and motorcycles with necessary support for operation
and maintenance would be provided.
.6 Two-way radios inthe communities/villages(sucos) willbe providedand operatedbythe
Ministry o f Internal Administration to get emergency medical help. Health centers, posts
and mobile clinics are already equipped with such radio communication facilities.
.& Healthprofessionals will be encouragedto be leaders intheir communities
SPECIAL SITUATION OF THE ENCLAVE OECUSSl OF
The lack o f access to markets is an overriding constraint facing the people inOecussi. Access
to East Nusa Tengara (NTB) or West Timor, which has beenthe traditional market and transit
point (e.g. Kupang) for the products and services generated in Oecussi i s virtually non
existent. The district i s largely cut o f f from the rest o f TimoFLeste with no regular ferry
service and travel by land through West ,Timer is unsafe. The UNoperates air services (fixed
wing and helicopter) primarily to serve the UN PKF and other personnel and there is
inadequate capacity (space) to cater to the ordinary citizens.
Similarly communications within Oecussi and with the outside including the rest of Timor
Leste i s lacking. The existirg Government systems are confined to Oecussi town and have
very limited range (about 100 meters?). The UN facilities (PKF and UN Police) are the sole
means for communication within Oecussi and with outside. It is necessary to put in place
Government andor private sector communications facilities before the withdrawal o f the UN
from Oecussi.
Local markets in the district are flooded with goods from West Timor/Indonesia and local
businesses complain that they can't compete with the imports not only in urbm centers but
also inthe subdistricts. A number o f income and employment generation schemes have been
promoted by civil society organizations and projects/programs funded by bilateral donor and
TFET. The success o f these initiatives depends critically ontheir ability to market the
products and services or access to markets. Many o f the initiatives are said to face difficulties
in marketing their products due to lack o f access to the markets in West Timor and lack o f
transport and hightransport costs to send the goods to Dili or other parts o f East Timor.
STABILITYPROGRAM
RepublicaDemocratica de TimoFLeste Page20 of 25
The Road Map- Annex 2
At least two options are available to address the constraints. The first involves negotiations
with Indonesia [including the local authorities in NTB such as theBupati and those who
control the border (TNI)] to allow traditional export o f such items as garlic, onions and cattle
and movement of people from Oecussi to West Timor with minimal restrictions. A second
option i s to provide regular and reliable ferry service linking Oecussi to the rest o f Timor
Leste at affordable prices. This may involve state subsidy, but can be justified on the basis o f
providing essential service (like roads) to an integral part o f the nation. Action on both
options (fronts) would be necessary to put the economy o f Oecussi back on a sustainable
growth path. Action on these should precede any new initiatives o n income and employment
generation.
The income and employment generation activities for which support under the Stability
Programwould be appropriate include the following:
6 Garlic andonionproductionto supplytotherestofTimor-Leste andexporttoIndonesia;
6 Improvingriceyields andproductiontomeetlocaldemand(largely substitutionfor
imports from Indonesia);
d Small-scale agro-processing includingimprovedricemilling;
6 Tourismdevelopment to catertovisitorsfromIndonesia(NTB), otherpartsofTimor-
Leste and from other countries;
6 Bricksandother constructionmaterialsto supplylocalmarket;
d Furnitureto supplylocalmarket;
6 Other small-scale industriesandservices;
d StrengthenthenewVocational TrainingCenterestablishedbyacivilsociety
organization;
6 Aquaculture;
6 Productionofeucalyptusoil; and,
d Re-plantingofsandalwood.
A number o f other activities to be implemented in all districts under the Stability Program
will also be implemented inOecussi.
INDICATNECOSTSAND FINANCING MODALITIES
lndlcatlveCosts
The indicative costs o f the various components o f the Stability Program are presened in the
following. Implementation o f some o f the activities within the ambit o f the Government
while the others depend critically on the active participation o f other stakeholders including
the beneficiary groups, communities and civil society organizatins including the Church.
As a result, it is more difficult to provide cost estimates onthe latter.
STABILITYPROGRAM
RepliblicaDemocratica de TimoFLeste Page 21 of 25
The Road Map- Annex 2
ii) Importofbasicgoods 250 250
iii) Exportofnichecommodities 100 100
Sub-total 500 500
d) ImprovingEducation
i)PrimaryEducation
Community Schools 250 250
Church Schools 500 500
ii)SecondaryEducation
Church schools 1,250 1,250
Education Subtotal 2,000 2,000
e) Promoting Health
i) Communityhealthservices 150 150
ii) Supporttohealthpersonnel 450 450
Health Subtotal 600 600
STABILITY PROGRAM
RepliblicaDemocraticade TimoFLeste Page 22 of 25
The Road Map-Annex 2
f, Special Situation of the Enclave ofO'ecussi
i) Transport(Ferry)
ii) Communications 1,000 1,000
iii) Othersupportservices 750 750
680 680
iv) Sub-total 2,430 2,430
Planning for Poverty Reduction Total 21,950 21,950
Grand Total 1,075 44,760 45,835
FlnanclngModalltles
Most o f the costs presented in Table 1 are over and above those included in the FY2003/04
CFET budget requests presented by the Ministries and Agencies. Assistance from
development partners is needed to cover most o f the costs. The resources required in the
balance of FY2002/03 will be mobilized from the carent year CFET Budget. The funding for
some components or subcomponents for the following 15 months in F Y s 2003/04 and
2004/05 could be accommodated through adjustments in ongoing bilateral and multilateral
programs and projects. N e w assistance for other activities under the Stability Program could
be made available through a range o f funding modalities including the following: (i)direct
funding through Government, (ii)channeling the funds through an intermediary such as a
multilateral agency, (iii) diect funding by development partner(s), and (iv) a combination o f
two or more above options.
The Government accords the highest priority to implementation o f the activities proposed
under the Stability Program. It welcomes support from development partneLs for the Stability
Program under modalities most appropriate to the activities and in tune with the preferences
o f the partners.
IMPLEMENTATIONAND CoORDlNATlON
The Stability Program will be coordinated by the Council o f Ministers. InterMinisterialSub-
committees will be set up to facilitate dayto-day coordination o f activities in different areas
o f the Program [Le. on Governance, Stability (Job Creation) and Development].
Implementation o f the Program will be carried out by line Ministries and Agacies in
collaboration with private sector, civil society organizations (including the Church) and
communities. The emphasis will be o n strengthening and utilizing existing Government and
other stakeholder institutions and mechanisms as much as possible.
RISKS
Political commitment by the Council o f Ministers to the Stability Program is clear and many
of the activities proposed under the Program have been successfully piloted in the country.
However, implementation o f the Program may encounter a number of risks. These are
discussed inthe following:
6 Itisnecessary for theMinistriesandAgenciestoworktogether onanumberofactivities.
This is new for most o f them and requires significant coordination and interface between
their activities. Overall coordination o f the activities at the national level i s to be
facilitated through inter-ministerial committees or working groups. District and Sub
district Administrators would carry out coordination at the district and subdistrict levels.
STABILITY PROGRAM
RepublicaDemocratica de TimoFLeste Page23 of 25
The Road Map- Annex 2
6 Implementation of some of the activities involves the active participation of and
partnerships with civil society organizations including the Church as well as communities
and beneficiary groups. While experience on such partnerships is available from pilot
projects, many Government officials have limited orientation and exposure to and
experience in nurturingthem. It will require understanding (including attitudinal change)
capacity and commitment to promote such partnerships. Training and technical assistance
are included under the Program to facilitate this process.
& Several components in the Stability Program entail entrusting funds and provision of
equipment and supplies to beneficiary groups and civil society organizations. Appropriate
mechanisms for ensuring tranqarency and accountability in these transactions are
essential. Examples o f these are available from successful pilot projects in the country
and will be drawn upon as appropriate.
6 Legitimising CheQ de Sucos and empowering them as well as the Subdistrict and
District Administrators i s a new initiative. It too requires appropriate mechanisms for
ensuring transparency and accountability, especially in the use o f block grants. The
criteria for use o f the funds including eligible activities in each districtvill be determined
in consultation with the people to cater better to local needs and priorities. Information
about the block grants and their utilization will be made available widely to the public to
ensure accountability to the people.
d The StabilityPmgramrequires substantialadditionalresourcesoutsidetheCFETbudgets.
Adequate assistance from development partners i s necessary to mobilize the funds. The
proposed policy dialogue with development partners (in the context o f formulation o f
their country assistance strategies) scheduled for April 2003 would provide an
opportunity to seek the latter's interest inand commitment to provide the funds.
Overall, the Stability Program, which i s somewhat ambitious when viewed in the context o f
the Government's capacity and implementation performance so far, can be implemented in
partnership with other stakeholders, with appropriate resource support and technical
assistance.
REPORTINGAND MONITORING
Progress on implementation o f the activities under the Prcgram will be through the Quarterly
Reporting Matrices (QRMs) as the Stability Program will be an integral part o f the
Government's Annual Action Plans (AAPs). Monitoring indicators by Program
componenthub-component will be specified in consultation with h e Ministries and
Agencies?* The Program will be monitored by the Council o f Ministers each quarter and
more frequently, ifthe needarises.
Line Ministries and Agencies will monitor the activities through normal administrative
channels. Any constraints encountered will be resolved either at the individual
22Examples o f indicators include reduction in number of security incidents, reduction in backlog 6pending
cases inthejudicial system, number ofjobs created, number o f people trained and number employed, increases
inrice production, increases inprimary and secondary enrolment, and increases innumber ofcases attendedby
health personnel. Given h e short 18-month duration of the Program, it will be more difficult to capture its
impacts, which take a longer time to show up inthe data.
STABILITY PROGRAM
RepGblicaDemocratica de TimoFLeste Page 24 of 25
The Road Map- Annex 2
Ministry/Agency or by the concerned Inter-Ministerial Subcommittee, as appropriate, and
reported to the Council o f Ministers each quarter.
An overall review o fthe programwill be undertakeninthe ThirdQuarter o fFY2003/04.This
would be based on a survey o f and/or focus group discussions with beneficiary groups. The
results including followup actions will be discussed with key stakeholder representatives.
STABILITYPROGRAM
RepublicaDemocratica de TimoFLeste Page 25 of 25
Programme Matrix
RepublicaDemocraticade Timor-Leste
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Timor-Leste: Overview of Sector Investment Programs - Volume 1 i
PREFACE
Over the past three years, the Government has made a concerted effort to strengthen the links
between policy formulation and programs to achieve the goals and objectives set out in the
National Development Plan (NDP), improve capacities to translate these objectives into annual
budgetary allocations, and strengthen capacities. Thus, it presents a clear guidance to
Development Partners regarding priorities for assistance and for various initiatives to be taken in
this regard. Annual Action Plans has been developed to establish clear links to budget processes
and to monitor progress towards development objectives. In 2003 the Government undertook the
so-called "Road Map" exercise that aimed to establish an expenditure framework for the medium-
term that could guide decisions o n allocation o f CFET and available resources from development
partners to particular sectors and programs.
The Sector Investment Program (SIP) exercise had its origins in the "Road Map" exercise o f
2003. As a result o f that exercise the Government saw the need to have in place comprehensive
statements development objectives, policies and programs for each o f the key sectors o f the
economy and to strengthen the linkages among programs across agencies and sectors. Prior to the
launch o f the SIP exercise; the Government had been heavily dependent on TFET and other joint
donor missions to ensure systematic development o f sector policies and programs. The SIP
exercise was launched inAugust 2003 with the express purpose o f building capacities o f staff and
state institutions for the development o f sectoral policy frameworks and related programs that
could provide a basis for decisions o n the allocation o f scarce donor and CFET resources required
to achieve particular development objectives.
This overview report integrates the results o f the Sector Investment Program. The report consists
of two volumes. The present report, Volume I,provides a strategic view o f the prospects for
growth and poverty reduction and key challenges facing the country in the medium and longer
term. It also aggregates the expenditures from the 15 SIPs and within the framework o f financial
availabilities for CFET and development partner resources projected to 2015, outlines priorities
for expenditures on a combined sources basis. Annexes to this main report provide more details
on the SIP process as well as underlying the analytical framework, data sources and details o f
macroeconomic and demographic projections to 2015. Volume I1 o f the report provides a
summary o f each o f the 15 individual SIPs, along with expenditure and other analysis for each
sector. Individual reports for each o f the 15 SIP sectors have also been completed. For each
sector, these provide details on the goals and objectives for each sector, the policy framework, the
program for the medium-term, and the associated expenditure framework.
The Ministry o f Planning and Finance wishes to express its appreciation to those development
partners who have provided support for this undertaking over the past year. The work would not
have been possible without the contributions o f Australia, Japan and N e w Zealand (UNDP-DAS
Program), United States o f America, the Asian Development Bank, the World Bank, UNDP and
UNICEF. The Ministry also wishes to acknowledge the extraordinary support and cooperation
that was provided by many staff and national technical officials who have contributed to the
success o f this process.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 11
TABLEOFCONTENTS
PREFACE ..................................................................................................................................................... I
ABBREVIATIONS AND ACRONYMS ............................................................................................... I11
EXECUTIVE SUMMARY ...................................................................................................................... IV
PART A: GROWTH, EMPLOYMENT AND POVERTY REDUCTION ........................................ 1
I. RECOVERY TO SUSTAINED STRONGGROWTH................................................ 1
11. DEALINGWITH RAPID POPULATION AND LABORFORCE GROWTH.......6
111. ECONOMICGROWTH AND INCOMEPOVERTY.................................................. 9
PART B: PUBLIC SECTOR EXPENDITURE PROGRAMS ........................................................ 13
IV. EXPENDITURE PROGRAMSAND PRIORITIES................................................. 13
V. MANAGINGTHE PROGRAM..................................................................................... 19
PART C: ANNEXES ............................................................................................................................... 26
ANNEX I.AN INTRODUCTIONTO THE SIP PROCESS ...................26
ANNEX 11:POPULATION CHARACTERISTICS AND PR .............29
ANNEX 111: PROSPECTSFOR PRIVATESECTOR DEVELOPMENT ......................... 3 1
ANNEX IV. PROJECTIONS FOR THE STRATEGIC FRAMEWORK................................ 37
...
Timor-Leste: Overview of Sector Investment Programs - Volume 1 111
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank
CCT Cooperative Caf6 Timor
CDR Crude DeathRate
CFET Consolidated Fund for East Timor
DAS Development Advisory Services
FY FiscalYear
GDP Gross NationalProduct
GNI Gross National Income
IMF IntemationalMonetary Fund
M&E Monitoring and Evaluation
MDG MillenniumDevelopment Goal
MICS MultipleIndicatorCluster Survey
NDP NationalDevelopment Plan
NGO Non-Government Organization
PKF Police Keeping Force
PNTL Policia Nacional de Timor-Leste
PSM Public Sector Management
REA Registry o f External Assistance
SIP Sector Investment Program
SWG Sector Working Group
TFET Trust Fundfor East Timor
TFR Total Fertility Rate
TLDHS Timor-Leste Demographic and GeneralHealth Survey
TLSS Timor-Leste Living StandardMeasurementSurvey
TSP Transition Support Program
UK UnitedKingdom
UN UnitedNations
UNDP UnitedNations Development Program
UNICEF UnitedNations Children's Fund
UNPOL UnitedNations Police
WTO World Trade Organization
Timor-Leste: Overview of Sector Investment Programs - Volume 1 iv
EXECUTIVESUMMARY
The Government has made a concerted effort to strengthen links between policy
formulation and programs to achieve the national goals and objectives set out inthe National
Development Plan (NDP), improve capacities to translate these objectives into annual budgetary
allocations, and strengthen capacities to give clear guidance to Development Partners regarding
priorities for assistance. The Sector Investment Program (SIP), which was launched in August
2003, i s another step in building capacities for well-articulated sector frameworks for the
medium-term that link policies, programs and expenditures and that provide guidance o n
expenditure priorities both within and across sectors. After 18 months o f intensive work, the first
phase o f the SIP exercise i s drawing to a close with the completion o f SIPs for 15 sectors o f the
economy. Work has also been initiated on two more SIPs. The results o f which will be built into
the combined sources expenditure framework later inthe year.
This overview report provides a summary o f the main results to date and outlines a course o f
action for the next phase o f the work.
KEY MACROECONOMIC RESULTS
A number o f important themes emerge from the analysis undertaken inthe SIP exercise, each o f
which has important implications for development policies andpriorities.
Prospects for growth and poverty reduction. The key points that emerge from the analysis are
as follows:
The economic contraction that began in 2002 is beginning to abate as the wind down
on UN-related activities comes to an end; growth i s expected to recover in 2005 led
by rising levels o f public spending, including construction and other investment-
related activities, as well as recovery in private activity. But for the period 2003-
2007 the average annual growth o f GDP is still only 1.3 percent a year in real terms.
With population growing at around 3 percent a year, average income per capita
continues to decline and progress in reducing income poverty i s slow.
In this period there would be heavy emphasis on halting the decline in public
spending on construction that has characterized the past four years. High priority i s
attached to an expanded program o f Government and donor-funded construction and
maintenance programs that will improve services and create jobs. At the same time,
an aggressive program o f private investment promotion would be launched with a
fundamental focus on the external market to lay the foundations for sustained strong
growth inthe longer-term.
The objective o f government policy i s to create conditions necessary for the economy
to enter a period o f strong sustained growth from about FY2007l08, driven by the
highlevels o f investment inthe public sector that emerge from the SIP proposals and
by rising levels o f private investment. GDP would grow at an annual rate o f 6 percent
a year in real terms during 2007-2015. The strong growth would be led by private
sector economic activity. The food production sector i s projected to grow at 2.8
percent a year, in line with population growth. Strong growth inthe non-food private
sector would be led by increased investment in commercial development o f the
natural resource base of the country, continued growth in small-scale manufacturing
that is already under way in Timor-Leste, expanded private services, tourism, and
construction.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 V
In these circumstances, there would be faster progress in reducing the incidence of
poverty. Evenso, there will still be a hard core o f around 200,000 in severe poverty
by 2015. Specially targeted programs will be needed to address the needs of this
group o f people.
Despite uneven progress in the incidence of income poverty, there is likely to be
good progress in improving access to basic services. The proposed program does
enable a transition to nine years o f basic schooling for all by 2015, for example.
Health indicators are expected to improve as the coverage and quality o f health
services are raised.
Even after taking account o f income from oil and gas, the non-oil Gross Domestic
Product o f Timor-Leste will only be around $550 per capita by 2015 (at 2000
constant prices). This means that Timor-Leste will still be classified as a low income
developing country, even after allowing for income from oil and gas.
Rapid populationgrowth translatesinto high ratesof urbanization.
The high rate o f increase in population is expected to translate into continued rapid
growth inurban areas. For the purpose o f estimating urban services requirements, the
SIP model assumes the urban population will grow at 5 percent a year. An additional
150,000 people will live in urban areas by 2015. Can this growth be distributed
among urban areas throughout the country? Or will continued unevenlevels o f urban
services and job opportunities lead to population concentration in Dili and Baucau,
which already account for approximately 90 percent o f the urban population o f the
country? What are the implications for local government and decentralization?
More work i s needed on urbanization policies and programs, including anticipating
housing and other service requirements. The cost o f providing public services to
these burgeoning urban populations may put considerable strains on financial
resources o f the Government. Hence, it i s even more important that measures are
taken in order to develop this area, by investing in the development o f basic
infrastructures that contribute to raising the living standards in rural areas, making
them more appealing to the population.
Creating enoughproductive employment will be a major challenge for the decade ahead.
Continued rapid population growth o f 3 percent a year and the relatively young
population translates into rapid growth in the labor force. In the event that the labor
force participation rate remains at its current estimated level o f 59 percent, which is
low by international standards, the labor force would grow at about 3 percent a year,
adding about 10,000 new entrants to the labor force each year seeking employment.
In the event that the participation rate rises to levels that are common among low
income developing countries around the world, the labor force growth rate could be
as high as 5 percent a year. In this case, the number o f new entrants seeking
employment would be inthe range o f 17,000 to 20,000 a year inthe decade ahead.
At the present time, the agricultural sector employs about 77 percent o f the entire
labor force at low levels o f productivity. The challenge is to promote rapid growth in
the non-food private sector, which currently employs about 70,000 workers at much
higher average levels o f productivity. Rapid growth in the latter will allow for a
gradual shift out o f low productivity employment inrural areas. With rising levels of
labor productivity, the incidence o f income poverty will decline.
For the medium-term, a key issue is the extent to which the agricultural sector can
create productive employment for the projected 5,000-9,000 new entrants into the
rural work force each year. Three critical policy issues emerge. Can the agricultural
Timor-Leste: Overview of Sector Investment Programs - Volume 1 v1
growth rate be increased through private investment that results in larger production
o f marketable surpluses for the domestic and export markets? Will much larger
numbers o f people move to urban areas looking for work? Can the non-farm sector
grow fast enough to absorb larger numbers o f people into productive employment?
Increased levels of private investment are the key to sustained strong economic growth,
which, in turn, is essential for significant reductions in the incidence of poverty in the
country.
The SIP exercise estimates that a growth rate o f 8 percent a year inreal terms will be
required in the non-farm private sector, if the overall target o f 6 percent growth in
non-oil GDP i s to be achieved and poverty reduced. The key to more rapid growth in
the non-farm sector will be increased levels o f investment, with a strong orientation
o n export markets. Achieving 8 percent real growth will require an average o f about
$60 million o f new private investment in the non-food private sector each year over
the medium-term.
In the event that private investment levels remain stuck at current levels o f around
$15 million a year, the growth o f the non-food private sector would be substantially
lower - perhaps around 3 percent a year in real terms. In this case, non-oil GDP
would only grow at about 4 percent a year inreal terms. Pressures in the labor market
would rise and there would be little or no progress in reducing the incidence o f
income poverty
PROPOSEDPUBLIC EXPENDITURE PROGRAMSFOR THE MEDIUM-TERM
Meeting the various goals and objectives set forth in the SIPS, would require combined CFET and
donor expenditures o f about $1.28 billion for the five-year period ending FY2008109. This
compares with about $900 million during the five-year period ending FY2003104. These totals
cover recurrent and capital spending.
The pattern of expenditureson a combined sources basis would undergo significant change
over the next five years. In recent years aggregate levels o f spending on a combined sources
basis have remained in the range o f $200 million a year. Over the next five years combined
sources expenditures would average about $230 million a year. The higher levels o f spending
stem primarily from a large program o f capital investment inthe power sector and in other basic
infrastructure.
A number of very important shifts inthe pattem o f spending emerge duringthe next five years.
First, the relative importance of CFET inthe combined sources framework continues
to rise. In FY2000/01 for example CFET resources funded only 12 percent o f
combined sources expenditures, after allowing for the CFET budget support provided
by donors. In the current fiscal year, CFET expenditures account for close to 40
percent o f total expenditures. By FY2008/09, CFET i s expected to account for almost
50 percent o f total outlays.
Second, dependence o n funding o f recurrent spending from the development partners
o f Timor-Leste would decline substantially over the next five years. By FY2008/09,
CFET would account for almost 80 percent o f recurrent outlays, compared with about
45 percent at the present time. Total recurrent expenditures o n a combined sources
basis would remain in the range o f $140 million a year, sufficient to ensure steady
progress towards the NDP, MDG and other objectives set in the SIP exercise for the
medium-term.
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 vii
Third, capital spending on a combined sources basis would rise steadily over the next
five years. Underpinning this increase are important shifts in the pattern of spending.
CFET capital expenditures would rise sharply from recent levels o f around $13
million a year to $25 million a year by FY2008109. Much o f the increase would be
allocated to capital replacement to ensure that public assets are kept in good working
order. Funding from the development partners o f Timor-Leste on capital expenditures
would rise from the recent low levels o f about $40 million a year. Much o f the
development partner funding o f capital expenditures would be for new asset creation
(power systems, improved roads, new schools, expanded provision o f safe water and
sanitation, for example), with CFET making larger capital replacement expenditures
on the public assets.
Meeting the various goals and objectives set forth in the SIPs will require important shifts
in the sectoral allocation of expenditures. The SIP analysis for each sector has brought out the
needfor shifts inresource allocations among sectors.
The most significant change is inthe area of basic infrastructure, whose share o f the
total combined sources budget would rise from 23 percent inthe past five years to 36
percent during the next five years. A large part o f this jump relates to the inclusion in
the program of the Ira Lalaro hydro-power project and transmission line to Dili at an
estimated total cost o f $112 million.
The second important point is that the resources allocated to basic services (health
and education) remains at the current level o f about $60 million a year. These levels
o f spending will ensure steady progress towards the interimMDGs set out inthe SIPs
for these important sectors.
Spending on activities in the production-related sectors rises by about 20 percent to
$20 million a year in the next five years, largely because o f a very sharp increase in
proposed spending on investigation o f onshore and near-shore petroleum resources
and on support for private sector development.
The allocation for security and external relations remains unchanged at 11percent o f
total spending.
Allocations for capacity building in the national government decline from about 13
percent to about 9 percent o f total spending, largely because o f the sharp phase down
inreliance on expensive expatriate advisory services over the next five years. At the
same time, there i s a large rise in spending on in-country training programs for
national staff.
There is increased support for programs aimed at improving other aspects o f
governance, including rights, equality and justice and local government, with these
expenditures rising from $40 million in the past five years to $70 million over the
next five years.
Proposals for donor funding for the next five years are lower than past allocations of such
assistance.
The activities proposed for donor funding would require new approvals of about
$550 million over the next five years, including about $150 million for a small
number of large investmentsinthe power sector. The average level of new approvals
i s thus about $110 million a year, $80 million a year o f which i s proposed for sectors
other than power.
This proposed level o f new on-budget commitments o f development and technical
assistance compares with actual commitments for the same category o f donor
assistance that averaged $150 million a year over the past five years.
Timor-Leste: Overview of Sector Investment Proarums - Volume 1 viii
In other words, the Government is already factoring possible lower levels o f donor
assistance into its medium-term expenditure planning.
For the longer term, the SIP exercise assumes that donor-funded development and
technical assistance will be in the range o f $80 million a year. This i s based o n the
current per capita allocations o f aid to low-income countries that have a strong
commitment to sound development policies and, with a few exceptions, have
experienced sustained strong economic growth.
FURTHER DEVELOPMENT OF THE SIP PROCESS
The Govemment has benefited from the SIP process in a variety o f ways and intends to
strengthen and broaden the process. It will be used to guide decisions on priorities and resources
allocations for the medium-term by building the results o f the work into the budget and other
planning activities o f the Government. A number o f specific actions are underway or are planned:
Under TSP 111, the Government has committed itself to the development o f a
combined resources budget for FY2005106. The SIP framework will be integrated
into this process.
Follow-up work i s planned to review existing performance benchmarks and interim
MDGtargets inthe light o f the SIP analysis and findings.
The strategic planning framework developed for the SIP will be strengthened and as
information becomes available from the 2004 census, the demographic and other
elements o f the framework will be revised.
Additional work is planned to address the current deficiencies in information about
public assets, and the costs o f maintenance and capital replacement.
NEXT STEPS WITH DEVELOPMENT PARTNERS
The proposed program for accelerated growth and steady progress towards the N D P and MDG
objectives will not be without difficulties, given the daunting task in the immediate future o f
building the capacities o f national institutions and staff to manage successfully the changing
development requirements o f the country. It will require strong support from our Development
Partners, including continued access to expertise and advice on the successes and failures in
development in other countries around the world. Given the importance o f CFET funding for
capital expenditures, it will also require a major buildup in capacities o f national staff to manage
the identification, design and implementation o f these capital development programs. It will
require changes inthe management o f development programs that are responsive to the changing
circumstances and capacities o f the country.
There is a need for immediate follow-up with development partners on funding for
proposed new activities. As noted above, the SIP process has identified a large number o f new
activities for start up during the next five years that are suitable for funding by Development
Partners. Within each sector, the responsible line agencies have given close attention to
prioritizing and sequencing new activities and programs. More than 200 new activities have been
identified for implementation over the next five years. A start date for implementation has been
established for each new activity. The Government would like to come to early understanding
with Development Partners regarding funding arrangements for the proposed program. With this
inmindthe following steps are being taken.
The Government will consolidate these proposals into a smaller number o f programs
and project packages that would be well suited for fundingby Development Partners,
Timor-Leste: Overview of Sector Investment Programs - Volume I ix
with due attention being given to known partners (donors) interests and funding
capacities.
0 The Government would then like to engage in a round o f discussions with its
partners, perhaps o n a sectoral basis, to determine the degree o f interest in individual
program proposals or in a series o f such proposals for implementation over the next
three years. The Government will want to ascertain the extent to which some partners
may wish to collaborate with others under any one o f several forms o f cofinancing
arrangements.
With early agreement on funding arrangements, work can begin immediately on the
most urgent activities that are scheduled for implementation this year.
For those programs that do not attract support from our partners, the Government will
consider other options, including funding from CFET or alternative sources, or
deferral o f the program to a later date.
Sector working groups are being set up to facilitate coordination within and across sectors,
among donors and between Government and donors. The SIP process has highlighted the
need to strengthen capacities within the Government for longer-term strategic planning across
various sectors that integrates concems about the growth and movement o f the population, with
the provision o f economic opportunities, basic services and national security. The Government
intends to take steps to strengthen these capacities. As a first step, the Government has begun the
formation o f Sector working Groups (SWGs) for some or all sectors. These working groups are to
be chaired by a senior Government official and are open to any donor who has an interest in the
particular sector. Sector Working Groups for the Health Care, Agriculture and Basic
Infrastructure have already been formally established. The Government expects the formal
establishment o f the SWG for Education and Training by M a y 2005, followed by the gradual
establishment o f the remaining groups within this calendar year.
The responsibilities o f the groups will evolve inthe light o f experience, but are expected to range
from informal advice to the agencies o f Government that are responsible for the sector inquestion
to a more wide-ranging role. The groups will have the onerous task o f mobilizing the necessary
resources to carry out the proposed SIP program, and at the same time ensure coordination o f
activities within the sector. Given their critical role in driving the SIP process, extensive support
will be needed from the donor community to ensure the success o f these groups. One o f the
biggest challenges for the Government i s strengthening the role and function o f the secretariat
within each SWG.
Increased attention to monitoring and evaluation in each sector. In reviewing various drafts
o f the SIPs, a number o f our development partners have made the point that there was discussion
o f the arrangements needed within each sector for monitoring and evaluation (M&E) o f progress
towards goals and objectives. With the release o f the final versions o f the SIPs, the Government
believes that the basis n o w exists for serious work o n the detailed definition o f an M&E
framework for each sector. The issue o f monitoring and evaluation o f sector objectives should be
discussed within the respective SWGs. It i s proposed that a pilot initiative for the design and
implementation o f an M&E system be developed within one S W G as soon as possible.
Experience with the development o f this pilot initiative can then be transferred to other sectors.
The Government would welcome the support o f one or more donors for this pilot initiative.
The Government would like to engage Development Partners in a dialogue on the transition
to the next phase of cooperation as TFET comes to a close. The Government would like to
explore with development partners various options for the next phase o f donor cooperation and
coordination as TFET draws to a close. The CFET framework used for the SIP exercise also
Timor-Leste: Overview of Sector Investment Programs - Volume I X
foresees the gradual phase down o f budget support over the next few years. N e w mechanisms will
be needed to enhance donor coordination. This report sets out a number o f different options that
move donor cooperation and coordination in the direction of relying on sector coordination
groups led by senior government officials. Within the sector coordination framework, increased
reliance on bilateral funding on a project basis, which may also involve cofinancing, would also
be pursued where there i s a clear understanding o f the priorities within each sector. The guiding
principle will be to marry the preferred modalities o f Development Partners to sector
requirements and Government priorities.
PART A: GROWTH, EMPLOYMENT AND POVERTY REDUCTION
I. RECOVERYTOSUSTAINED STRONGGROWTH
Since restoration o f Independence, the Government has articulated clearly its vision for the
development o f the country and, with the help o f the donor community, has set about the pursuit
o f this vision. The National Development Plan, widely discussed during the course o f preparation,
sets out the strategy for the five year period 2002-2007. This strategy i s driven by two key
objectives:
The reduction o f poverty inall sectors and regions o f the Nation; and
The promotion of economic growth that is equitable and sustainable, andthat
improves the health, education and well-being o f the entire country.
The population is growing rapidly and, in the absence of sustained and broad-based economic
growth over the last five years, there has been only limited progress in reducing poverty and
improving food security. The incidence o f poverty remains high with an estimated 42 percent o f
the population below the national poverty line. However, there has been significant progress in
expanding access to health and education services inmany parts o f the country. Despite progress
on these and other fronts, the country continues to face a daunting set o f challenges. With
approximately 50 percent o f the population below the age o f 18 for example, there will be great
pressures on the education system to equip these young people for productive lives and to create
employment opportunities for a very large number of new entrants into the labor force each year.
Poverty reduction in Timor-Leste is closely linked to economic growth. Analysis by the World
Bank and others draw attention to the large numbers o f people who are vulnerable to poverty and
who can benefit from the income and employment effects o f sustained economic growth. A key
objective for the next five years is to promote a recovery to sustained strong economic growth.
PROMOTING RECOVERY TO SUSTAINED STRONG ECONOMIC GROWTH
Recent trends in the economy. Table 1 summarizes estimates o f GDP by industrial origin at
current market prices. The estimates for the period 2000 through 2003, recently prepared by the
National Statistics Directorate, affect perceptions about the growth o f the economy during this
period. Inanalyzing these trends, it is convenient to group the sectors inthe national accounts into
three broad sets o f economic activity: (a) all public sector activity which includes, government
activities, the United Nations , public sector construction and utilities, which are essentially
government-owned and operated; (b) the food production sector (food crops, livestock and
fisheries) which approximates the largely private subsistence sector o f the economy; and (c) the
remainder o f the national accounts sectors which are essentially all other private production and
services in the economy, including commercial agricultural production, forestry, mining and
quarrying (excluding oil and gas), manufacturing, transportation, financial and other services. For
convenience, this group o f sectors is called the non-foodprivate sector.
The first important point that emerges from Table 1 is that as measured by value added, the non-
food private sector is the largest o f the three components o f the economy, accounting for about 40
percent of non-oil GDP. The public sector and food sector account for about 38 percent and 22
percent respectively. The second important point that emerges i s that the growth experience o f
Timor-Leste: Overview of Sector Investment Programs - Volume 1 2
these three sectors varied widely during 2000-2003. These differences have important
implications for the short- and medium-term outlook for the economy.
Value added in the food crop, livestock and fisheries sector within agriculture, after
recovering strongly in 2001, declined steadily thereafter and by 2003 was back to the
2000 level. With population growth at around three percent a year in this period, the
real value o f food production per capita declined throughout the period, exacerbating
problems o f food insecurity.
The non-food private sector grew at an average o f 5.6 percent a year in real terms
during 2000-2003. The commercial agricultural sector recorded strong growth
throughout the period, as did manufacturing, financial services and the transport
sector. These gains were partly offset by contraction in private construction and
wholesale and retail trade, both o f which were heavily influenced by the departure o f
international personnel from 2002 onwards
Value added inthe public sector grew by 26 percent in 2001 only to be followed by a
sharp contraction as the UN phased down its presence in Timor-Leste. These
contractionary effects more than offset to very strong growth performance o f the
national government sector in which value added registered a threefold increase in
three years. There were two opposing trends inthe sector in the past five years: value
added by United Nations activities declined very sharply, as did public construction,
whereas value added by the remainder o f the government activities grew rapidly in
real terms with the build-up o f the national government.
Table 1: Gross Domestic Product by IndustrialOrigin
Sector 2000 2003 2007 2010 2015 2000-2003 2003-2007 2007-2011
Value added (at 2000 constant prices USS millions) Growth rates (% p.a.)
Food, livestock & fisheries 68.6 68.9 77.0 83.6 96.0 0.2 2.8 2.8
Non-food private sector 111.1 130.8 149.0 186.6 278.0 5.6 3.3 8.1
Public sector
Government 22.9 65.9 81.0 93.8 119.7 42.2 5.3 5.0
Construction & utilities 30.2 18.3 32.5 39.8 50.8 (15.4) 15.4 5.7
United Nations 83.4 38.6 - (22.7) -
Sub-total 136.5 122.8 113.5 133.6 170.5 (3.5) (2.0) 5.2
Non-oil GDP 316.2 322.5 339.5 403.8 544.5 0.7 1.3 6.1
Oil & gas mining 77.5 51.9
GDP 393.7 374.4
GDP deflator (2000=100.0) 100.0 104.1 114.9 123.7 140.0 1.4 2.5 2.5
Non-oil GDP (at current prices) 316.2 335.7 390.1 499.5 762.3 2.0 3.8 8.7
Population(`000) 819.4 898.0 1,005.1 1,095.4 1,266.8 3.1 2.9 2.9
Non-oil GDP per capita (5) I 386 374 388 456 602 I (1.1) 0.9 5.6
Source: National income accounts for 2000-2003 providedby National Statistics Directorate
Inreal terms, non-oil GDP increased by a total o f two percent during 2000-2003 - substantially
less than the population which grew at around three percent a year in the same period. At current
market prices, non-oil GDP stood at about $375 in2003.
Future growth of the economy. A set o f projections for 2005 through 2015 have been prepared
for the SIP exercise. These are built up from the proposed public expenditure programs and
expectations about private investment activity. The underlying expectation i s that during 2005-
2007 the economy will gradually recover from the contraction o f recent years and will be able to
make a transition to sustained strong growth o f 6 percent a year in real terms in the longer-term.
A key driver is sustained high levels o f investment spending by the Government and donors that
Timor-Leste: Overview of Sector Investment Programs - Volume I 3
supports expansion in construction, a recovery in private economic activity and an improved
performance inthe agriculture sector.
These projections are built around a series o f policy judgments that are embedded in the SIPSfor
the various sectors. The public sector i s expected to continue to contract for several more years as
a result o f the complete phase-out o n UN-related activities. In the medium-term at least these
contractionary effects outweigh the contributions o f the proposed strong expansion in public
construction activity (discussed below) and continued steady growth in the provision o f public
services. For the longer-term, the public sector i s expected to grow at about five percent a year in
real terms, driven b,y population growth o f close to three percent a year and an aggressive
program o f spending and service delivery that aims to expand substantially the current l o w levels
o f access to public services throughout the country by meeting the MDGs for 2015.
The growth o f the food production sector i s projected to approximate that o f population growth -
that is about 2.8 percent a year in real terms. With the rural population projected to grow at about
2.2 percent a year, the implication is that food output per person in rural areas would rise
moderately - in other words, the proposed strategy for improved food security as spelled out in
the SIP for agriculture and livestock would bring some improvements in food supplies and
security. Increased private investment in commercial activities such as palm oil, live animal
exports, and other specialty products for overseas markets as discussed below, would lift the
overall agricultural growth rate to around four percent a year in real terms inthe longer-term. The
performance would still fall short o f the NDP target o f six percent real growth for agriculture in
the medium-term, but it would put Timor-Leste among a small, select group o f low income
developing countries that have experienced sustained strong agricultural growth over the past two
decades. '
The third key element o f the strategy for making a transition to sustained strong growth in the
medium and longer term has to do with the further development o f the non-food private sector.
As noted above, this is already the largest sector inthe economy and it is one that, under the right
policies, offers the best prospects for sustained strong growth that can create jobs and improve
living standards for large numbers o f Timorese. A two-pronged approach in being taken to the
further development o f the sector:
An aggressive expansion o f publicly-funded construction activity to rehabilitate and
expand infrastructure and facilities, with an emphasis o n labor-intensive methods to
create employment. This will require strong support for the domestic private
construction sector.
Increased emphasis on the promotion o f private investment, including foreign direct
investment, in a broad range o f business opportunities in the non-food private
sector, namely commercial agricultural activities, manufactures, including various
wood products such as furniture, and a range o f processed food products, tourism,
and other activities.
Promotion of construction activities. The Government intends to give a high priority to
construction activities that are funded from the CFET budget and by donors. There is a clear need
to improve infrastructure services in the country and to continue with an aggressive program
rehabilitate public facilities that are in poor condition, as well as build new facilities such as
'For all low income developing countries, the agricultural sector grew in real terms at three percent a year
inthe 1980s and2.5 percent ayear inthe 1990s.A small group of these countries (including Benin,Chad,
Laos and Mozambique) have managed sustained strong growth of four percent ayear or more in agriculture
over an extendedperiod.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 4
schools and clinics. These outlays will improve service delivery, support the growth o f private
business activities and create employment. The Government has been very encouraged by
experience with Japan's ongoing $13 million road construction project which currently employs
approximately 2,000 people using labor-intensive methods. The SIPs include an ambitious
program to expand construction sector activities, with particular attention being given to the use
o f labor-intensive methods. Table 2 gives the estimated value o f public construction activity in
recent years and projected levels o f expenditures based on the proposals included in the
individual SIPs.
Table 2: EstimatedValue o f Public Construction Activity in Timor-Leste
(InUS$mill)
Activity I2000/01 2001/02 2002/03 2003/04 2006107 2008109
Roadworks
Maintenance 1.o 1.5 2.3 3.1 3.9
Construction I 4.3 16.3 15.8 3.7 21.5 27.3
Sub-total 5.3 17.8 18.1 6.8 25.4 34.1
Other construction 46.8 25.1 19.6 15.7 33.9 37.3
ITotal value of construction I 52.1 42.9 31.1 22.5 59.3 71.4)
Source: various SIPs.
The first point that emerges from Table 2 is that spending o n public construction activity has
declined sharply since the peak o f 2000/01. By 2003104 public construction activities were less
than half that in 2000101. Declining levels o f public construction have had a significant
contractionary effect in the economy, with substantial employment effects. The SIPs call for a
substantial build-up in publicly funded construction over the next five years. If the programs can
be implemented as proposed, public spending on these activities would rise to around $70 million
a year by 2008109. The employment effects o f this increased level o f spending would be
substantial, perhaps adding as many as 10,000 jobs to the labor market in this five-year period.
The Government i s well aware o f the challenge associated with lifting public spending in these
areas. Although there has been progress in developing the domestic construction industry much
more remains to be done. There i s an urgent need to build the capacities o f the relevant line
agencies for the proposed larger volume o f work that flows from this strategy. The development
partners have an important role to play in this regard. The domestic construction industry must
also be strengthened. Further development o f the industry will require a move towards equipment
leasing arrangements for small and medium-sized domestic construction firms, improved
information for the private sector on the expected flow o f new construction contracts for the
public sector, along with early completion o f the Government's procurement guidelines that are
currently under preparation, improved access to working capital lines o f credit from the banking
sector, as well as increased emphasis on skills development in the labor force and for local
entrepreneurs. Ongoing projects such as the EU-funded $5 million employment training program
have a major role to play inthis regard. Given that it will take time to build capacities inthe local
construction industry, the Government recognizes that at least in the early phases, the program
may require increased use o f foreign contractors, preferably under joint-venture and other
partnership arrangements such as sub-contracting, that will strengthen the domestic industry.
Promotion of private investment and the non-food private sector. The second key part o f the
strategy for a successful transition to sustained strong growth is to accelerate the growth o f the
non-food private sector. For non-oil GDP to grow at six percent a year, the non-food private
sector must grow at around eight percent a year (both inreal terms). This will require two things:
first, aggressive action to improve the enabling environment for private investment, including
improved infrastructure services, continued adequate domestic security and streamlined
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 5
Government procedures that facilitate and support private investment; and second, an aggressive
promotion program aimed at building up private investment to about $60 million a year within
the next five years. Inthe longer-term, private investment in the sector will have to rise to about
$100 million a year if growth is to be sustained at these levels. The SIP for Private Sector
Development includes an ambitious program o f support for the promotion o f domestic and
foreign investment in Timor-Leste. A strong emphasis on foreign direct investment will be
important. The fact i s that the domestic economy o f Timor-Leste i s small, in part because o f
widespread poverty. While there are opportunities for some import-replacement investment,
domestic demand i s not large enough to ensure growth o f six percent a year inreal terms. Timor-
Leste must look to export markets for successful implementation o f its strategy for sustained
strong growth. In this connection, attracting foreign direct investment will be essential to bring
technical and managerial know-how to the country, as well as an understanding o f the
opportunities in international markets and o f changing consumer requirements, as well as the
kinds o f domestic services needed for a successful tourism industry. Annex I11includes a more
detailed discussion o f the outlook for a number o f the key sectors inthe economy. Strong growth
i s anticipated in the commercial forestry and fisheries sub-sectors, in industry and construction,
and inprivate services, including banking, trade, tourism and transport.
Category 2001 2003 2004 2010 2015
Fixedcapitalformation
Public sector 107.9 87.9 85.5 96.0 110.0
Private sector 37.5 17.1 10.2 63.7 108.2
Sub-total 145.4 105.0 95.7 159.7 218.2
Change ininventories 14.5 10.5 9.6 16.0 21.8
Total investment 159.9 115.5 105.3 175.7 240.0
Investmentas YOnon-oilGDP
Public investment 29.3 26.2 25.1 19.2 14.4
Privateinvestment 10.2 5.1 3.0 12.7 14.2
Total fixed capital 39.5 31.3 28.1 31.9 28.6
The overall implications for the growth o f investment needed for sustained strong economic
growth are summarized in Table 3. The estimates for public investment are built up from the
proposals in the various SIPs, while those for private investment are estimated on the basis o f
what will be requiredfor 8 percent real growth inthe non-food private sector. The first point that
emerges is that aggregate investment levels in Timor-Leste have been high by international
standards. Over the pastfour years, investment has amounted to about 35 percent o f non-oil GDP,
which compares with an average o f 22 percent for all developing countries in 2000.' Second, the
strategy would result ina significant shift inthe pattern o f investment over the next decade. Inthe
past four years, public investment has accounted for about three-quarters o f all fixed investment
in the country, driven as it has, by the need to restore public services and rehabilitate damaged
and destroyed public assets. The public investment program going forward is dominated by
spending on infrastructure, including in particular improving access to safe water and sanitation,
increased access to electricity generated from domestic sources o f low cost energy, and
continuing rehabilitation and construction education, health and other key service sectors. As the
Education and Training SIP points out, additional facilities are required for the more than 80,000
See World Bank, WorldDevelopment Indicators, 2002. WashingtonDC, 2002.
Timor-Leste: Overview of Sector Investment Proarams - Volume 1 6
children who still don't have access to basic education. As Table 3 suggests, overall levels o f
public investment would remain relatively stable inthe range o f about $100 million a year, but as
the subsequent discussion indicates, a rapidly increasing share o f these expenditures would be for
capital replacement to maintain public assets in good order. Successful implementation of the
proposed strategy for the private sector to become the primary vehicle for creating opportunities
for employment and increased incomes would mean that private investment would rise steadily to
more than $100 million a year by 2015. Public and private investment, taken together, would
remain inthe range o f 30 percent o f GDP.
The economy would undergo significant changes in structure as a result of this pattern of
growth. The relative importance o f the agricultural sector, which currently accounts for close to
30 percent o f non-oil GDP, would decline. The construction sector would grow in importance,
given the projected growth in investment spending with large civil works components inthe road
sector and in water supply and sanitation, and continued rehabilitation facilities in health and
education The share o f the public sector - the largest sector in2000, accounting for 43 percent o f
non-oil GDP at that time - would decline to around 30 percent o f non-oil GDP by 2015.
Increasingly, it i s private sector - including commercial development o f agriculture and natural
resources -that drives economic growth.
11. DEALING WITH RAPID POPULATION AND LABOR FORCE GROWTH
IMPLICATIONS OF RAPID POPULATION GROWTH
Timor-Leste i s experiencing a rapid increase in its population, currently in the range o f three
percent a year. The provisional results from the 2004 census conducted by the National Statistics
Directorate put the population at 924.5 thousand in mid-2004, 49 percent o f whom are female.3
Based on the provisional results from the Census, the Directorate has prepared revisedpopulation
projections to 2015. Under the base case scenario, population would grow at an average o f 2.9
percent a year rising to 1,266.8 thousand people by 2015. All SIPS have been revised to
incorporate these new populationprojections (Table 4).
Indicator 2004 2007 2010 2015 , have profound implications
Population (`000) for the country. As the SIP
Male 470.4 511.3 557.3 644.8
Female 454.1 493.8 538.1 622.0 exercise makes clear, there
Total 924.5 1,005.1 1,095.4 1,266.8 are majorimp1ications for
Memo items: provision o f basic services,
Crude birth rate (per `000 population) 41.8 42.1 42.4 42.8 including education, health
Crude dealth rate (per `000 population) 15.0 14.5 14.6 14.6 and housing. Rapid growth
Population growth (% p.a.) 2.8 2.8 2.9 2.9 in the labor force will also
Females as YOof total 49.1 49.1 49.1 49.1 put great pressure on labor
See Annex I1 for a more detailed discussion of the preliminary results from the 2004 census and the
populationprojections.
Timor-Leste: Overview of Sector Investment Programs - Volume I 7
Another consequence i s that non-oil GDP per capita, which was about $375 in 2003 (at 2000
constant prices), does not increase significantly during the next few years. The likely implication
i s continued slow progress in reducing income poverty, at least until there i s a recovery to strong
economic growth from 2007 onwards. By 2015, GDP per capita would have risen to about $600
inreal terms (at constant 2000 prices). Inother words, Timor-Leste will continue to be classified
as a low income developing country for at least another de~ade.~
The Government i s committed to strong programs aimed at reducing poverty and food insecurity,
and improving health and education. It i s therefore very likely that the current high crude death
rates will decline as a result o f these programs. What are the implications for population growth?
The answer depends on whether improved living conditions lead to a decline in fertility rates.
Table 5 therefore summarizes the results o f two possible scenarios both o f which assume a rapid
decline inmortality rates:
0 Alternative A assumes there is no change in the current very high fertility rates, but
that there i s a decline inmortality.
Alternative B assumes that fertility rates also decline.
Scenario Crude birthrate (per '000) Crude death rate (per '000) Population 2015 ('000)
2005 2015 2005 2015 Total 0-11years
Base case scenario 41.8 42.8 15 14.6 1,266.8 453.2
A. Constant fertility rate 41.8 42.2 14.8 10.9 1,291.1 467.8
B.Decliningfertility rate 41.2 36.7 14.7 10.3 1,250.4 427.1
In Scenario A the population growth rises to an average of 3.1 percent a year as a result of the
assumed decline inthe CDR to 10.9 per thousand by 2015. Such a decline i s very plausible, given
that the average CDR for all low income developing countries was 11 in 2000. The result i s a
population o f approximately 1.3 million by 2015. However, if the current very high total fertility
rate o f 6.3 birthsper woman were to decline, the population growth comes down (Scenario B).In
this case, population could be lower than in the Base case used for the SIP exercise. An even
more rapid drop in total fertility cannot be ruled out. By way o f comparison, the average total
fertility rate for women in low income developing countries was 5.3 in 1980, but it had declined
to 3.8 by 2000.
The alternative populationprojections have significant implications for service provision inurban
and rural areas. For example, the number o f children in 2015 aged less than 12 years will be
determined by fertility and mortality rates in the decade ahead. The number in this group in
Scenario B i s 40,000 more than in Scenario A in 2015. The Scenario B outcome will add $2-3
million a year to the costs o f providing primary andjunior secondary education services to these
additional children by 2015.
EMERGING ISSUES IN URBAN DEVELOPMENT
Reliable estimates o f urbanpopulations are currently not available because o f the lack o f formally
gazetted boundaries that define the administrative jurisdictions o f urban areas. Preliminary
analysis o f the census data suggests an urban population o f approximately 206,200 last year -
Under World Bank country classifications, a low income developing country is definedas one with a GNI
per capita of $755 at 1999 prices. Even with the benefits o f income from oil and gas and from related
investmentincome, the GNIof Timor-Lestewill be about $700 per capita(at 2000 constant prices) in2015.
See the SIP for Housing and Urban Development for a further discussionof issues associatedwith urban
development anddefinition o ftown boundaries.
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 8
implying an urbanization rate o f 22 percent. This is somewhat lower than previous estimates o f
24 percent based on survey data. The census indicates that about 168,000 o f these urban dwellers
live inDili-equivalent to about 80 percent o f the urban population o f the country.
Rapid population growth and continuing inequalities in urban and rural services are assumed to
give rise to continued rapid urbanization in the range o f five percent a year. Urban population
growth in this range i s quite consistent with the experience o f other developing countries with
high overall population growth. For a panel o f 14 countries whose population growth rate
averaged three percent a year for a decade or more during the last two decades, the urban
population grew at an average o f 5.4 percent a year for the group as a whole during 1980-2000.6
The implication is that the urban population o f Timor-Leste rises to almost 360,000 by 2015 -
implying an urbanization rate o f 28 percent. At this rate o f urban growth, the rural population
grows at about 2.2 percent a year inthe decade ahead. More than 80,000 people are projected to
move from rural to urban areas in this period. By 2015 there would be about 65,000 urban and
200,000 rural households.
Indicator 2004 2007 2010 2015 extent to which urban population growth
Population (000s) will continue to center largely on Dili or
Urban 206.2 238.9 277.6 357.2 whether there will be prospects for a more
Rural 718'3 766'1 817'8 909'7
Total 924.5 1,005.0 1,095.4 1,266.9 dispersed pattern of urban development
Households (000's) with the emergence o f other growth centers
Urban 37.8 43.8 50.9 65.4 inthe country as inresponse to newprivate
Rural 157.2 167.6 178.9 199.0 investment and improved infrastructure
Total 195.0 211.4 229.8 264.4 services, schools and health facilities.
Memo items Despite the uncertainties about the likely
Urban Population(%) 22.3 23.8 25.3 28.2 future growth of urbanareas, it is clear that
Household size
Urban 5.5 the Government must develop a coherent
5.5 5.5 5.5
Rural 4.6 4.6 4.6 4.6 strategy for urban development and for the
Average 4.7 4.8 4.8 4.8 provision o f services for these urban
dwellers. A start is being made with the
Civil Society SIP, and the various
infrastructure SIPS, all o f which have strong Indicator 2004 2007 2010 2015
urban service components. Population 15-64 years
Male 248.1 273.8 298.4 346.6
Females 245.1 269.9 292.6 338.3
GROWTH OF THE LABOR FORCE Total 493.2 543.7 591.0 684.9
There are no reliable estimates o f the labor Labor force
force, a situation that should be rectified Male 171.9 189.8 206.8 240.2
once the final results o f the 2004 census are Female 117.9 129.8 140.8 162.7
Total 289.8 319.6 347.6 402.9
available. For the purposes o f the SIP Participation rate (9/.)
exercise, the National Statistics Directorate 69.3 69.3 69.3 69.3
has prepared a projection o f the labor force E:::, 48.1 48.1 48.1 48.1
58.8 58.8 58.8 58.8
The 14 countries included in the sample are Angola, Benin, Cambodia, Congo D.R., Congo, CBte
d'Ivoire, The Gambia, Honduras, Kenya, Namibia, Niger, Tanzania, Uganda, and Zimbabwe. World Bank,
WorldDevelopment Indicators, 2002 for details.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 9
the census for labor force participation rates. The assumption used in these projections is that in
the decade ahead the participation rate remains unchanged at the current estimated level o f 59
percent. In this case, the labor force would grow from about 290,000 last year to a little over
400,000 by 2015 - an average annual growth o f three percent a year (Table 7). The implications
for economic growth and employment creation are significant. Under these assumptions the
current net increase inthe labor force i s estimated at about 9,000 a year, rising to about 10,300 a
year by 2015. For the five-year period 2004-2009 covered by the SIPs, new entrants into the labor
force are estimated at about 50,000
Indicator 2004 2007 2010 2015
Farmwork force 223.2 236.2 249.9 274.5 for the SIPs also permits estimation o f
Non-farmwork force 66,6 83,4 97,6 128,5 urban and rural labor force growth, the
Public sector 17.5 19.5 21.0 25.0 results o f which are set out inTable 8. The
Privatesector 49.1 63.9 76.6 103.5 farm work force accounts for about three-
Total work force 289.8 319.6 347.5 403.0 quarters o f the total labor force in 2001.
Memoitems: Given the foregoing projections o f urban
Farmwork force % total 77 0 73.9 71.9 68.1
approximates the non-farm labor force, is projected to grow by about six percent a year in the
decade ahead, while agricultural work force grows at about two percent a year. A basic issue for
the SIPs andthe design of development policies andstrategies for the medium- and longer-term is
whether it will be possible to create productive employment opportunities for the approximate
6,000 entrants into the non-farm work force each year in the decade ahead, quite apart from the
needto absorb at least 5,000 workers ayear inthe rural sector.
By 2015, the rural work force would account for about two-thirds of the total labor force. This
scenario suggests that value added per agricultural worker, which i s currently about $440 a year,
would begin to rise in real terms. This level o f agricultural productivity is comparable to many
other low income developing countries with predominantly rural economies, but it i s substantially
below the levels o f agricultural productivity o f the major countries o f Southeast Asia.'
111. ECONOMIC GROWTH AND INCOME POVERTY
Indicator 2001 2003 2007 2010 2015 poverty line Timor-
in
Peoplebelow nationalpoverty line
No. ofpoor (`000s) 333.8 370.0 403.0 399.8 253.4 Leste, which implies that
Headcount(% o fpopulation) 39.5 41.2 40.1 36.5 20.0 the number Of peoplein
Peopleliving below $1 a day poverty can be influenced
No. o fpeople (`000s) 169.0 188.6 191.0 186.2 177.4 strongly by economic
Percentofpopulation(%) 20.0 21.0 19.0 17.0 14.0 growth. Economic
Memo: contraction over the past
Totalpopulation(`000s) 845.0 898.0 1,005.1 1,095.4 1,266.8
'For example, in 1998-2000 agricultural value added per worker was about $460 in India, $340 in
Bangladesh and $370 in China, but in Thailand and the Philippines value added per worker was about
$1,100, in Indonesiaabout $850 and in Malaysia about $7,700 in the same period. (All figures adjustedto
2000 prices.) World Bank, WorldDevelopment Indicators, 2002. WashingtonDC, April 2002.
Govemmentof Timor-Leste et al, Timor-Leste,Poverty in a New Nation: Analysisfor Action. May 2003
Timor-Leste: Overview of Sector Investment Proprams - Volume I 10
three years has likely resulted in an increase in the number o f people below the income poverty
line. The SIP framework includes an estimate o f some 370,000 people - or 41 percent o f the
population below the national poverty line in 2003 (Table 9). Moreover, it i s likely that more than
20 percent o f the population continues to live on less than US$1 a day, which translates into about
190,000 or more who are in extreme poverty. Survey information also suggests that a large
numbers o f rural dwellers, particularly in upland and dryland farming areas, continue to face
problems o f food insecurity.
Table 9 also sets out the planned progression towards the MDG goal o f halving the incidence o f
extreme poverty by 2015. A s the Table indicates, even with progress inreducing the incidence o f
poverty, the total numbers o f people affected is likely to rise over the medium-term. The
combination o f weak growth for two more years and continued rapid population growth results in
a steady increase in the number o f people in poverty. Strong growth beyond 2007 begins to have
an impact o n poverty, but even though the incidence o f poverty begins to decline and by 2010
drops to 36.5 percent - an improvement over the situation in2001 - the total number o f people in
poverty i s still about 400,000 in 2010. With sustained strong growth o f six percent a year, there
i s a reasonable expectation that the incidence o f income poverty can be reduced to 20 percent by
2015. Even so, there would still be about 250,000 below the income poverty line at that time.
The core o f the poverty problem over the longer term centers on the 175,000 in extreme poverty
who, for various reasons, continue to subsist o n the equivalent o f less than $1 a day, and who
continue to have inadequate levels o f food intake. Over the longer term, poverty reduction
programs must be able to identify these people and address the root causes o f their poverty with
appropriate targeted interventions.
The above prospects for income poverty reduction need to be balanced against progress in
providing access to basic services. Inthis regard there has been progress, the details o f which are
discussed elsewhere in this report. Some 250,000 children now attend school. Health services
have been expanded and now reach larger numbers o f people. There has also been progress in
expanding access to safe water and improved sanitation in urban and rural areas. And as
discussed elsewhere inthis report, implementation o f the programs set out in the various SIPSwill
result in significant increase in access to basic health and education services throughout the
country, a large increase in the number o f urban and rural families that have access to safe water
and sanitation, and within the next five years, good progress in laying the foundations for
substantially enhanced access to low cost electricity inmany parts o f the country.
UNCERTAINTIES ABOUT GROWTH AND POVERTY REDUCTION
These prospects for a sharp reduction in the incidence o f income poverty must be qualified,
however; a number o f major uncertainties surround these growth forecasts and their impact on
poverty. Among the major downside risks are the following:
Slower overall economic growth because of a poor performance inagriculture.
An inability o f Timor-Leste to attract $60 million a year o f private capital for
investment in the non-food private sector, as discussed in Chapter 1. As a result, the
growth o f the non-food private sector i s much lower as i s GDP growth.
Higher population growth as a result o f a successful reduction in mortality rates, but
with no corresponding reduction infertility rates.
A rapid growth in the labor force as a result o f rising participation rates (and also
because o f natural increase).
Given that the bulk o f the population will continue to reside in rural areas and depend o n
agriculture for their livelihood, the growth performance o f the agricultural sector will have a
Timor-Leste: Overview of Sector Investment Programs - Volume I 11
significant bearing on the extent o f poverty reduction. Annex 111includes a brief review o f the
potential for commercial agriculture. A key issue is developing better links with markets and
other interventions that will improve incentives for farmers to produce marketable surpluses and
for business to invest larger amounts in commercial opportunities. If however, the long-term
agricultural growth rate i s only say 2 percent a year - not the 3.5 percent a year built into the base
case projections, the GDP growth would be about 10 percent lower. In this scenario, average
output per laborer inagriculture would decline inreal terms throughout the decade ahead. Inthese
circumstances, it i s very likely that the exodus from agriculture would accelerate; led by younger,
better education people who are looking for work. A sustained poor performance in agriculture
would very likely place substantially greater strains on urban areas to create opportunities for an
improved life.
Another major uncertainty centers on whether the country can successfully attract $60 million a
year o f new investment into the non-food private sector. Much work remains to be done in
identifying these business opportunities, lowering the costs o f infrastructure services, improving
the overall environment for investment and in developing suitable export markets. What happens
ifthe level of private investment remains stuck inthe range of $15 million a year - close to the
estimated recent levels? Inthis case, the growth rate o f the non-food private sector would average
about three percent a year - not the eight percent a year in real terms called for in Chapter 1. As a
result, non-oil GDP would grow at no more than four percent a year in real terms. In these
circumstances, it i s very unlikely that the non-food private sector would create anywhere near
enough new employment to meet the needs o f an urban labor force projected to grow at six
percent a year in the decade ahead. In the absence o f other measures, this would almost certainly
result in continued high levels o f unemployment and under employment, especially among young
people, that in turn could lead to increased social and political strains.
Table 10: Alternative Scenarios for GDP and Labor Force Growth
Growth Scenario Amount Growthrate (% u.a.)
.High 2003 2007 2015 !003-2007 2007-2015
GDP growth & slower labor force growth $
Non-oil GDP (US$ mill) 322.5 339.9 545.0 1.3 6.1
Non-oil GDP per capita (US$) 360 340 430 (1.4) 3.0
Labor force ('000) 281.1 319.6 402.9 3.2 2.9
Non-oil GDP per worker (US$) 1,147 1,064 1,353 (1.9) 3.1
,High GDP growth & high labor force growth
Labor force ('000) 281.1 344.0 515.7 5.2 5.2
. Non-oil GDP per worker (US$) 1,147 988 1,057 (3.7) 0.9
Low GDP growth & slower labor force growth
Non-oil GDP (US$ mill) 322.5 339.9 465.0 1.3 4.0
Non-oil GDP per capita (US$) 360 340 370 (1.4) 1.1
Labor force ('000) 281.1 319.6 402.9 3.2 2.9
.Low Non-oil GDP per worker (US$) 1,147 1,064 1,154 (1.9) 1.0
GDP growth & high labor force growth
Labor force ('000) 281.1 344.0 515.7 5.2 5.2
Non-oil GDP per'worker (US$) 1,147 988 902 (3.7) (1.1'
Yet another major uncertainty relates to the growth in the labor force. The estimates for new
entrants into the labor force discussed in the previous Chapter are lower than previous estimates
based on survey and other data. There i s reason to believe that the current labor force
participation rate for Timor-Leste o f 59 percent is on the low side. The average labor force
participationrate for all l o w income developing countries has been remarkably stable over time at
Timor-Leste: Ovevview of Sector Investment Programs - Volume 1 12
about 78 percent9 At about 70 percent, the participation rate for males in Timor-Leste looks
especially low. The average male participation rate for low income countries i s over 90 percent
according to World Bank data. This raises the possibility that labor force participation rate may
rise in the decade ahead as more children have access to basic and advanced education and
population continues to move from rural to urban areas. More rapid increases in participation
rates would raise the labor force growth rates. The National Statistics Directorate has prepared an
alternative scenario for labor force growth inwhich the participation rate rise to about 75 percent
by 2015 - a level that prevailed in Timor-Leste in the 1990s. Inthis case, the labor force would
rise to about 515,000 by 2015. In this scenario, the number o f new entrants into the labor force
would average 20,500 a year inthe decade ahead- double that inTable 7 above.
The four scenarios set out in Table 10 give different combinations o f economic and labor force
growth:
Scenario A i s the base case discussed in Chapter Iabove - a recovery to sustained
strong economic growth, with steady improvement in output per workers and rising
income per person. As discussed earlier, there is steady progress in reducing the
incidence o f income poverty inthis scenario.
In Scenario B there is no change inthe economic growthperformance of the country,
but labor force participation rates rise and the labor force grows at 5 percent a year.
Inthis scenario, output per worker essentially stagnatesfor the decade ahead. Inthese
circumstances it i s difficult to see much progress in reducing the current high
incidence o f income poverty.
0 Scenarios C and D summarize the implications o f slower economic growth when the
labor force grows at 3 percent and 5 percent a year respectively. In these two cases,
non-oil GDP per capita stagnates at current levels and inthe case o f rising labor force
participation rates (Scenario D), output per worker declines steadily throughout the
decade. Inthese scenarios, it i s very likely that the incidence o f income poverty inthe
country would rise beyond current levels o f about 42 percent - perhaps to around 50
percent withinthe decade ahead.
These alternative scenarios serve to underscore the importance o f a successful implementation o f
the strategies set out inthe SIPSfor growth, investment and service delivery.
According to the World Bank, the average labor force participation rate for low income countries was
19.2percent in 1980 and 11.3 percent 2000. See WorldDevelopment Indicators, 2002.
Timor-Leste: Overview of Sector Investment Proprams - Volume I 13
PART B: PUBLICSECTOR EXPENDITUREPROGRAMS
The preceding Section o f this report emphasized the importance o f growth in reducing income
poverty. But the reduction o f poverty, very broadly defined, requires intervention across many
fronts. Improved access to health and education, to electricity, safe water and improved sanitation
all play a role in reducing poverty. Moreover, adequate levels o f national security are essential,
not only because it i s the right o f every citizen, but because the adequacy o f security has an
important influence on the climate for private investment, which, intum, affects the prospects for
investment that can generate the incomes andjobs needed for reduced poverty.
The purpose o f Part B o f this report i s to provide an overview o f the expenditures proposed for
each o f the 15 sectors that, if implemented as proposed, will help lay the foundations for the
sustained strong growth discussed in Part A, while at the same time, allowing for significant
progress in addressing the above-mentioned wider dimensions o f poverty. The Section also sets
out the fiscal strategies that, over the longer term, will ensure the transition to an expenditure
regime that is financially sustainable. Against this backdrop, Volume I1o f the report discusses the
specific programs o f the Government in each o f the 15 sectors o f the economy, along with the
required expenditures needed to implement these programs.
IV. EXPENDITUREPROGRAMS AND PRIORITIES
TOTAL EXPENDITURESFOR EACH SECTOR
The SIP Model aggregates
Sector FY1999/00-FY2003/04 CFET and donor funded
Amount I Percent programs for each sector to
Basic services
Education & training 195.2 22.0 192.7 provide a summary o f total
Health care 106.7 12.0 120.8 expenditures across all
Sub-total 301.9 34.0 313.5 sectors. As noted elsewhere
Production-related sectors
Agriculture, forests, fisheries 70.6 7.9 64.8 in this report; these
Natural resources& environment 10.4 1.2 21.1 expenditures refer to
Private sector development 10.2 1.1 29.8 2.3 development and technical
Sub-total 91.1 10.3 9 0 assistance that is either "On-
Basic infrastructure & housing
Communications 7.1 0.8 budget" or "Off-budget.'' The
Housing and Urban Development 5.2 0.6 results o f these aggregations
Power 67.2 7.6 for on-budget spending are
Transport 81.7 9.2
Water supply & sanitation 46.3 5.2 set out in Table 11. Total
Sub-total 207.4 23.4 466.8 spending would amount to
Governance $1.29 million for FY2004/05
Public sector management 113.9 12.8 108.7 through FY2008/09,
Local government & civil society 10.7 1.2 25.1
Rights, equality &justice 30.4 3.4 44.8 3.5 compared with about $890
Security & peacebuilding 64.5 7.3 131.7 10.2 million in the past five years.
External relations 37.8 4.3 23.0 1.8 CFET resources would fund
Sub-total 257.3 29.0 333.4
Unallocated 29.9 3.4 about 40 percent o f the
Total development & technical 887.6 100.0 proposed program compared
Memo items: to 34 percent in the past five
Total CFET appropriations 302.5 34.1 511.8
UNfunded critical posts 21.8 2.5 years, a large amount o f
Bilateral military assistance 7.3 0.8 which was actually provided
Donor programs 561.4 63.2 763.8 59.3 by donors in the form o f
Source: Aggregation o f expenditures in individual SIPS. budget support.
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 14
The proposedprogram would result in significant shifts in allocations o f resources among sectors.
The allocation for the power sector rises sharply because o f the inclusion in the program o f some
$112 million for the Ira Lalaro hydro-power project and associated 180 km. transmission line to
Dili. With a sharply increased allocation for the transport sector as well, the share of
infrastructure spending rises to about 36 percent o f the total program, compared to 23 percent in
the past five years. Education and training continues to receive a large allocation o f resources,
even though there i s a drop in the share o f total spending. As indicated in Chapter I1o f Volume
11, the proposed levels o f spending are sufficient to meet the interim MDG enrolment targets over
the next five years. Spending on health care also rises, largely because o f the proposed program
for rehabilitation o f hospitals and health clinics. The amount o f resources allocated to the
production-related sectors rises because o f the substantially larger programs associated with the
possible development o f onshore and nearshore oil and gas. The share o f resources allocated to
security and peacebuilding also rises, largely because o f increased allocations for capacity
buildinginthe PNTL.
In the previous five years, Public Sector Management (PSM) received the second largest
allocation o n a combined sources basis after education and training. For the five-year period
ending FY2008109, the P S M share o f total spending drops to about 8.4 percent, largely because o f
the planned sharp reduction in expatriate advisers. The `unallocated' category also shows a large
increase. There are several reasons for the increase. A notional provision has been included here
for the requirements o f the two SIP programs that are still under preparation: these are the "Other
Pillars o f the State" and "Social, Civil and Heritage Protection". When these two SIPS are
completed inthe coming months, the aggregate combined sources requirements will be revised to
reflect the results o f the work. The "unallocated" category also includes a modest amount o f
additional CFET expenditures for capital replacement and recurrent expenditures that are not yet
allocated to specific sectors. The basis for these additional allocations is discussed later in this
Chapter.
These proposed reallocations reflect the intention o f the Govemment to adjust overall pattems o f
spending among sectors in the light o f changing circumstances. The guidelines that will shape
these reallocations are as follows:
The Government remains committed to allocating a large share o f total resources to
health and education. The combined total for these two sectors would remain in the
range o f 25 percent o f total spending, at least for the medium term. The past high
allocations reflect, to some extent, the inclusion o f development partner-funded
compensation for the large numbers o f expatriate staff inthese sectors.
The Government wants to see a larger share o f resources going into building and
maintaining the basic infrastructure o f the country. Under the proposed programs the
share o f resources allocated for infrastructure rises from 23 percent to 36 percent. If
the $112 million allocated for the Ira Lalaro power project and transmission line were
excluded from the above, infrastructure would then be about 30 percent o f total
spending.
The Government also recognizes the importance o f ensuring national security and
therefore intends to allocate a somewhat larger share o f resources to these programs.
RECURRENTAND CAPITAL EXPENDITURES
Inthe course o f the SIP exercise, an effort was made to estimate capital and recurrent spending
that i s "on-budget'' in each sector. An aggregation o f the results is set out in Table 12. Two
important sets o f issues about expenditure policy emerge from this Table. The first concems
capital expenditures. Over the past five years, capital spending by the public sector o n
development-related activities i s estimated at about $300 million, three-quarters o f which was
funded by the partners o f Timor-Leste. A matter o f growing concern for the Government i s to
ensure that the public assets o f the country are adequately maintained and, as necessary,
rehabilitated. At this time, there are no reliable estimates for the total value o f the public assets,
including infrastructure, o f the country. A very informal estimate developed as part o f the SIP
exercise puts the replacement cost o f these assets in the range o f $500-600 million. If the average
life o f the assets is 15 years, capital replacement expenditures would need to average around $35
million a year. This i s substantially higher than what i s currently provided for in the CFET
budget. In recognition o f these needs, the Government intends to raise the allocations for
maintenance and replacement o f capital in the coming years. While no final decisions have been
made o n the amounts involved, the SIP exercise includes an increase in CFET-funded capital
expenditures'to $25 million by FY2008109. This would lift CFET capital spending from the level
o f about 3.5 percent o f non-oil GDP inthe recent past to almost 6 percent by FY2008109. For the
longer-term, CFET funding o f capital expenditures would need to rise to around 9 percent o f
GDP to meet requirements for capital replacement as well as new asset creation. The sharp rise in
donor funding o f capital expenditures in FY2005106 through FY2008109 stems mainly from the
large investment program for the Power Sector discussed earlier inthis Chapter.
Table 12: Trends in Capital and Recurrent Expendtures by the Public Sector inTimor-Leste (US$millions)
Type of Expenditure IFY2000101 FY2001102 FY2002103 FY2003104 FY2004/05 FY2005106 FY2006107 FY2007/08 FY2008109
Recurrent expenditures I
CFET 29.5 46.7 64.0 66.1 66.7 76.7 84.7 92.4 101.7
Donor programs 69.4 76.3 70.3 68.9 80.1 68.0 55.8 49.6 30.6
Sub-total 98.9 123.0 134.3 135.0 146.8 144.7 140.5 142.0 132.3
Capital expenditures
CFET 21.7 10.5 14.6 13.2 11.2 14.8 17.6 21.0 25.1
Donor programs 51.2 69.4 48.8 39.0 39.1 74.7 100.9 99.0 75.8
Sub-total 72.9 79.9 63.4 52.2 50.3 89.5 118.5 120.0 100.9
Total expenditures
CFET 51.2 57.2 78.6 79.3 77.9 91.5 102.3 113.4 126.8
Donor programs 120.6 145.7 119.1 107.9 119.2 142.7 156.7 148.6 106.4
Total 171.8 202.9 197.7 187.2 197.1 234.2 259.0 262.0 233.2
Memo items
CFETas% totalexpenditures 29.8 28.2 39.8 42.4 39.5 39.1 39.5 43.3 54.4
Recurrent as % GDP 28.9 34.6 39.6 39.9 42.3 40.2 37.1 34.9 30.0
Capital as % GDP 21.3 22.5 18.7 15.4 14.5 24.9 31.3 29.5 22.8
The second set o f issues relates to recurrent spending policies. A s Table 12 indicates, the
Government expects a gradual reduction in funding by the partners o f Timor-Leste o f recurrent
expenditures. The SIP exercise makes provision for CFET allocations for recurrent outlays to rise
to about $100 million by FY2008109, with partner funding declining to $30 million. This means
that CFET would be funding more than three-quarters of recurrent expenditures by FY2008109.
This represents a significant shift from the past four years when CFET domestic resources
financed only about 20 percent o f recurrent expenditures, with the balance covered by donor-
funded budget support and direct bilateral financing. CFET funding of recurrent expenditures,
which is currently equivalent to about 19 percent o f non-oil GDP, would rise to about 23 percent
by FY2008109, consistent with the levels o f funding required for steady progress towards the
MDGs and other objectives set out inthe various SIPS.
As Table 12 makes clear, by FY2008109 CFET would be funding about 54 percent o f total
expenditures called for under the SIPs, compared with only 12 percent in FY2001102 for
example, when large amounts o f CFET budget support were provided being provided by the
partners o f Timor-Leste. The proposed program sets forth a manageable transition to financial
sustainability, while at the same time, addressing many o f Timor-Leste's most urgent and
difficult development challenges that center on poverty reduction.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 16
PLANNEDEXPENDITURELEVELSARE SUBJECTTO UNCERTAINTIES
The Government is well aware o f a number of uncertainties associated with the proposed
expenditure program. Four inparticular need to be highlighted.
Timely mobilization o f new resources from the development partners and prompt
disbursementof funds.
Capacities o f Govemment implementing agencies to ramp up their development
programs.
The likely hture levels of donor assistanceavailable to the country.
Large uncertainties about future petroleum revenues, given the dependence o f Timor-
Leste on the Bayu Undunpetroleum project and the volatility o f world oil prices.
Mobilizationand disbursement of new donor resources. The SIPs contain more than 200 new
activities that will now need to be packagedinto a smaller number o f projects and programs. This
packaging exercise has begun and the Government will soon start a round o f discussions with
donors to gain support for the various proposals in the program, all o f which are described in
Project Information Summaries that are being made available to development partners. The
prioritization o f programs within each sector by individual ministriesand agencies has resulted in
a schedule o f new approvals for each o f the next three years. The proposals contained in the
Annex Table 5 o f each SIP are summarized in Table 13 below. The total o f the new approvals
included inthe SIPs amounts to about $550 million, $152 million o f which is in the power sector
for several large new projects aimed at expanding access to electricity in key centers o f the
country. The average level o f new approvals o f development and technical assistance for the next
five years i s therefore $110million a year, of which $80 million a year would be for sectors other
than Power. This compares with average approvals o f comparable development and technical
assistance o f a little over $150 million a year during the five-year period FY1999100 through
FY2003104. In other words, The Govemment has already factored into its forward financial
planning a somewhat lower level o f development and technical assistance, compared with the
extraordinary levels that prevailed inthe past as a result of the urgent need to rehabilitate much o f
the economy and to fundthe high cost of expatriate advisory staff.
Table 13: ProposedNew DonorFundingto be Approved EachYear
FY2004/05 FY2005/06 FY2006/07 FY2007/08 FY2008/09 Total
Education& training 10,408,000 44,421,000 5,900,000 60,729,000
Healthcare 20,495,320 12,698,000 33,193,320
Agriculture, forestry, fisheries 13,240,000 8,250,000 6,250,000 5,400,000 1,750,000 34,890,000
Naturalresources & environment 8,725,000 3,450,000 1,000,000 13,175,000
Private sector development 12,275,000 8,550,000 5,000,000 25,825,000
Communications 2,311,150 5,594,600 900,000 8,805,750
Housing & urbandevelopment 5,635,000 5,365,000 160,000 11,160,000
Power 1,350,000 92,825,000 29,500,000 8,700,000 20,000,000 152,375,000
Transport 2,850,000 26,100,000 21,450,000 10,000,000 60,400,000
Water supply & sanitation - 18,892,000 8,930,000 8,000,000 35,822,000
Publicsector management 371,000 52,200,000 3,450,000 8,000,000 64,02 1,000
Local government & civil society 2,200,000 1,000,000 5,000,000 2,000,000 2,000,000 12,200,000
Rights, equality &justice 15,892,000 2,100,000 6,450,000 24,442,000
Nationalsecurity 5,600,000 3,750,000 30,000 9,380,000
External relations & cooperation 3,452,000 1,230,000 4,682,000
Total newapprovals 99,169,470 286,695,600 94,225,000 47,260,000 23,750,000 551,100,070
Memo item:
Disbursementsfrom new approvals 32,373,332 114,250,640 151,853,348 132,705,050 89,591,700 520,774,070
Source: Annex Table 5 of each SIP
Timor-Leste: Overview of Sector Investment Pronrams - Volume I 17
The Government is taking steps to create Sector Working Groups (SWGs) for each o f the key
sectors. The steps being taken inthis regard are discussed inmore detail later inthis Section. The
intention i s to build the SWGs as the primary mechanism for discussing with donors proposed
programs and priorities within each sector and for ensuring that appropriate funding arrangements
are in place for each sectoral program. The most urgent task i s to reach early agreement with
donors on the proposed new approvals amounting to $126 million o f projects that the
Government would like to start implementing in the year ahead. In the case o f Education and
Training for example, Table 13 indicates that some $60 million o f new proposals would require
donor support over the next three years, equivalent to an average level o f new commitments o f
$20 million a year. To the extent that some proposals do not attract donor support, the
Government may have to consider alternative funding arrangements or may need to defer the
start-up o f the project or program.
Absorptive capacities of Government agencies. The proposed program calls for disbursements
from these new approvals inthe amount o f $32 million this year. There has been some progress in
mobilizing these required new levels of support, but at this stage this estimate o f new
disbursements appears overly optimistic. It is unlikely that a sufficient number o f these new
projects can be started quickly enough to allow for this level o f disbursements, even if funding
agreements are inplace for all activities. A substantial part o f the program is technical assistance
that can probably be mobilized quickly. However, there are also a number o f large civil works
programs involving construction and/or rehabilitation o f facilities such as schools and hospitals,
procurement action for which may take time. The disbursements for the current fiscal year will
almost certainly be somewhat lower than projected in the current versions o f the individual SIPs.
In subsequent tables in this chapter, the disbursement schedules for new projects have been
adjusted to reflect more realistic levels o f expenditures from new projects and programs.
The Government is very conscious o f the fact that in some cases, proposals for increased levels o f
spending may only be realized if the planned improvements in capacities o f the relevant agencies
to manage larger programs are in fact realized. The SIPs have built in various programs to help
expand these capacities, but slippage in some areas cannot be ruled out, in which case there may
be a slower build up in expenditures over the medium-term. As has been the case inrecent years,
the Government will monitor spending capacities closely and, if need be, adjust sectoral
allocations should that prove to be needed. In any event, the Government attaches a very high
priority to the range o f programs built into the SIPs that aim to build institutional and human
capacities for effective design and implementation of public programs. The Government will
want to work closely with development partners to ensure that appropriate attention i s given to
buildingimplementation capacities ineach o fthe sectors.
Overall levels of donor assistance. The third area o f uncertainty relates to overall levels of
assistance that are likely to be available to Timor-Leste inthe medium and longer term. Table 14
provides a summary o f the trends in international financial support for Timor-Leste for the ten
years under review in the SIPs. The main point is that there is a steady downward trend in levels
o f support. If UNPOL and PKF operations are excluded, total support (as measured by annual
disbursements) trends down from the high o f $236 million in FY2000101 to about $106 in
FY2008/09, assuming that the programs in the SIPs are implemented as proposed. If UNPOL
and PKF operations are included, the peak level o f assistance was $519 million inFY2000101.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 18
Table 14: Trends in Intemational Assistance for Timor-Leste (US$millions)
Type of Assistance IFYl999/00 FY2000/01 FY2001102 FY2002103 FY2003104 FY2004/05 FY2005106 FY2006/07 FY2007/08 FY2008/09
1 I
Development & T A on-budget II 63.0 120.6 145.7 119.1 107.9 108.2 57.7 31.7 13.6 6.4
:$?::d new (adjusted) 11.0 85.0 125.0 135.0 100.0
Sub-total 63.0 120.6 145.7 119.1 107.9 119.2 142.7 156.7 148.6 106.4
Development & TA off-budget 26.6 33.6 33.4 36.7 25.8 16.3 7.7 3.0 3.1
UNSecurity Council posts 13.8 8.0 7.0
Humanitarian assistance 84.1 29.7 11.8 3.4 I.8 0.9
Budget & commodity support 27.1 44.6 31.8 31.1 32.6 21.8 1.5
Donor administrative expenses 1.1 7.3 5.5 4.6 4.5 3.9 3.3 1.1 0.5
Total assistance 201.9 235.8 228.2 208.7 180.6 169.1 155.2 160.8 152.2 106.4
Memo items:
W O L & related 33.1 51.9 45.4 26.7 15.7 5.1
UNPKF 65.6 231.1 145.0 104.4 74.7 12.9
Grand total 300.6 518.8 418.6 339.8 271.0 187.1 155.2 160.8 152.2 106.4
In preparing the SIPS, the Government has looked beyond FY2006107 to gauge, for planning
purposes, possible levels o f support that may be available while bearing inmindthat Timor-Leste
will still be classified as a low income developing country. Data published by the World Bank
indicates wide variation inlevels o f aid per capita. After excluding post-conflict countries such as
Bosnia Herzegovina and Macedonia, these data suggest upper levels o f around $100 per capita
per year. These higher levels are often associated with countries that have strong economic
performance supported by effective development policies. A sample o f eight countries that
receive highlevels o f aid per capita, but have varying degrees o f development performance yields
an average o f $80 per capita per year for 2000.10 For planning purposes, the Government has
factored into its longer term financial planning an assumption o f official assistance o f $80 per
capita per year. Given the population projections set out in Table 3 above (Chapter II), this
suggests access to external assistance inthe range o f $85 million from 2010 onwards.
The second point concerns the use o f donor funding. The Government expects to phase out direct
budgetary support during the period under review, but does want to maintain "On-budget''
development and technical assistance programs in the range o f $110 million a year on an
approval basis through the end o f the NDP period, 2002-2007. This level o f support is essential
for an effective transition to a more sustainable financial position and to maintain the high levels
o f investment needed to lay the foundations for a strong economic recovery. Beyond the Plan
period, and assuming that domestic revenues improve along the lines projected, the Government
anticipates some decline in levels o f development and technical assistance from donors. As noted
in the previous section, this assistance is assumed to run at about $80-85 million in the longer
term, and as long as Timor-Leste i s designated as a l o w developing income country.
Uncertainties aboutpetroleum revenues. Timor-Leste is subject to extremely large uncertainties
about the amount o f revenues that it will raise itself. The principle cause for these uncertainties
concerns its petroleum revenues. Three issues inparticular are important inthis regard:
First, the domestic revenues o f Timor-Leste are heavily dependent o n petroleum.
This is despite the considerable efforts being made to expand non-petroleum
revenues. While petroleum revenues are uncertain, they will probably account for
about 80 to 90 percent o f total revenues over the medium-term.
Second, the only material source o f petroleum revenues i s from one petroleum
project, the Bayu Undan field (although within the next two or three years, the
Phoenix field exploration may commence).While that may change with a successful
lo eightThe counties are Albania, Lao D.R., Mauritania, Mongolia, Mozambique, Namibia, Papua New
Guinea and Zambia. With the exception o f Mongolia and Zambia these countries all experienced strong
economic growth during the 1990s that averaged almost 5% a year (on an unweighted averagebasis).
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 19
resolution o f maritime boundary disputes with Australia or if new petroleum
projects proceed, currently any technical or production problems with Bayu Undan
have a direct effect on Timor-Leste revenues. For example, the drilling problems at
Bayu Undan in late 2003 led to a dramatic fall in expected revenues. While the
operating companies were subsequently able to recover from some o f these
problems, and rising world oil prices more than restored revenues, similar problems
could occur in future. The Bayu Undan project will not be completed until the
pipeline and LNG plant are built and fully operational. Risks to revenue remain
particularly highuntilthe development phase o f Bayu Undan i s fully completed and
operations have provento be successful.
Third, world oil prices have been, and will continue to be extremely volatile. Over
the last ten years, world oil prices per barrel have ranged from a l o w o f about $10 in
the late 1990sto a higho f about $55 in2004. For half o f the last ten years the price
has been below $24. With current world oil prices still around $50 there is
considerable risk that they will fall again. Indeed, world oil futures markets expect
the price to decline to about $45 in2005 and to continue to decline thereafter.
Furthermore, volatility in world oil prices leads to a disproportionate change in Timor-Leste
revenues. Much o f this revenue is based o n the profits o f Bayu Undan rather than its sales.
When high capital costs are considered, a 10 percent change inworld oil prices could lead to a 20
or 30 percent change inTimor-Leste revenues over the medium to long term. Therefore, changes
inTimor-Leste revenue will probably be even larger inpercentage terms than changes inworld
oil prices.
For these reasons, changes in Timor-Leste revenues are to be expected, though it i s unclear
whether these will involve higher or lower revenues, or whether the changes will be large or
small. Prudent financial management suggests that the country should plan o n the basis that the
current very high levels o f petroleum prices will not be sustained and that they will trend down in
the coming years. It i s for this reason that the Government intends to take a cautious approach
towards the future use o f periodic windfall gains from temporarily high petroleum prices. Any
significant downward revisions to the petroleum revenues would require Timor-Leste and
Development Partners to reconsider their development strategy for reducing poverty and reaching
the MDGs inTimor-Leste.
V. MANAGING THE PROGRAM
The proposed program for accelerated growth and steady progress towards the N D P and MDG
objectives will not be without difficulties, given the daunting task in the immediate future o f
building the capacities o f national institutions and staff to manage successfully the changing
development requirements o f the country. It will require strong support from our Development
Partners, including continued access to expertise and advice o n the successes and failures in
development in other countries around the world. Given the importance o f CFET funding for
capital expenditures, it will also require a major buildup in capacities o f national staff to manage
the identification, design and implementation o f these capital development programs. It will
require changes inthe management o f development programs that are responsive to the changing
circumstances and capacities o f the country.
THE TRANSITION FROM DEPENDENCEON TFET
Management o f the program over the medium-term will require flexibility in adjusting funding
arrangements to the changing circumstances o f the country. Inthis period, the TFET operation as
Timor-Leste: Overview of Sector Investment Proarams - Volume 1 20
we know it today will come to a close. Moreover, within a few years the Government expects to
discontinue reliance on direct support o f the kind that i s currently provided under the TSP
program. Other mechanisms will be required for the provision o f development assistance over
the medium- and longer-term, given that the Government expects that in time an increasingly
large share o f the ongoing partner assistance will be used for capital investments o f one kind or
another.
The Government has already opened a dialogue with donors regarding the transition from TFET
and inthat connection several options have been tabled. The Government would like to continue
these discussions with the donor community and reach agreement on the mechanisms that will be
needed for the medium and longer term. Guidelines need to be developed to facilitate close
cooperation and clear understandings between Development Partners and the Government
regarding options for funding. The following outlines some o f the key considerations for these
discussions. First, given that the Government expects to continue to rely on some form o f
program support for several more years, the current TSP arrangements would continue to be used
to channel donor resources direct to the budget, within a new perspective - that o f Consolidation
-andwithinthescopeoftherecently adoptedConsolidationSupportProgrammeI(CSP I). This
mechanism would continue to be used to establish benchmarks for performance related to the
formulation and implementation o f policies, and to program design and implementation.
Second, to facilitate the transition from TFET, the Government foresees reliance on three
mechanisms for the delivery of those aid resources that are not channeled through the TSP
program. These would be applicable to specific projects and program assistance:
One i s to continue to rely on established mechanisms for the design and
implementation o f individual bilateral and multilateral projects and programs. Under
these arrangements, our partners are expected to give close attention to the priorities
for projects and programs as articulated in the SIPSand align their support with these
activities. Inthese cases, the donors would continue to assume primary responsibility
for the design and execution o f each program, in close consultation and coordination
with the relevant ministry that is the agreed domestic counterpart.
The second possible mechanism will be increased reliance o n existing cofinancing
arrangements among development partners. Under these arrangements, the
Government would look to the Asian Development Bank, UN agencies and the
World Bank to act as executing agent o n behalf o f those donors who, for one reason
or another, don't wish to take on the task o f identifying, designing and implementing
particular projects. The UN Agencies and the World Bank have already been active
in using this mechanism. The Government would want to explore with its partners
further possible use on such arrangements o n a case by case basis.
A thirdpossible mechanism would be a variant o f the already established cofinancing
mechanism. Under this third option, a particular partner may act as executing agent
on behalf o f one or more other partners. But the Government o f Timor-Leste would
assume greater responsibilities for the design and management o f the project, while
working very closely with the partner designated as the executing agent. The
responsible Government agency would play a major role in project design, in
drawing up procurement procedures, in undertaking environmental and other
assessments as necessary, and in oversight and supervision o f project
implementation, along with the many other activities typically associated with the
project cycle. Under these arrangements the agency within the Government who is
responsible for the project would be expected to play an active role in making
decisions o n the release o f finds that might be held in a special project account. The
objective under this mechanism is to accelerate the training o f national staff in all
Timor-Leste: Overview of Sector Investment Programs - Volume 1 21
aspects o f the typical project cycle. The partner designated as executing agent would
be expected to play an important role inhelping develop these skills.
Third, because o f the importance o f employment creation, the Government wants to promote
greater reliance on domestic sources o f supply inthe design and implementation o f these bilateral
and multilateral programs, consistent o f course with prudent and cost effective procurement. As
the SIP for Private Sector Development indicates, the Government intends to examine the merits
o f using preferences for local suppliers in contract awards, as well as the feasibility o f using
domestic content rules to facilitate the further development o f domestic business. Concerted
efforts by the partners o f Timor-Leste to source supplies from local business can make an
important contribution inthe task o f creating productive employment opportunities for perhaps as
many as 15,000 new entrants into the labor force, as discussed inChapter 11.
The Government looks forward to further discussion with donors on these mechanisms to ensure
a smooth transition away from reliance on trust funds as the role o f TFET comes to a close in the
next few years.
ISSUES RELATED TO DEVELOPMENT PARTNER COORDINATION
The successful completion o f the first full cycle o f SIPs for all key sectors o f the economy is a
milestone in the continuing evolution o f working arrangements with development partners,
commonly referred to as donors. For the first time, the Government has prepared a
comprehensive set o f sectoral policies and programs that cover almost all aspect o f development
Table 15: Donor CoordinationIndic )rs
- in Timor-Leste. In the course o f the work, a
No. of ai e donors number o f issues emerged that were common
'Y2002/0 'Y2003/0L to many o f the SIPs. In a number o f sectors,
Education & training 12 9 especially those where TFET had not been
Healthcare 12 12 active, there was a tendency towards large
Production sectors numbers o f relatively small, interventions by
Agriculture, forestry, fisheries 14 11 donors, with little evidence o f effective
Natural resources, environment 10 6
Private sector development 7 6 coordination among our partners or with the
Basic infrastructure responsible government agencies. In a number
Communications 9 6 o f cases, progress in building sectoral policies
Housing andurban development 3 2 and programs were hampered by differing
Power I 5 approaches being taken by various donors. One
Transport 5 3
Water supply & sanitation 8 6 example is from the Justice Sector where
Governance training programs have reflected legal
Public sector management 19 18 backgrounds and traditions o f the donors who
Local government & CSOs 16 16 provide the funding, which has not necessarily
Rights, equality &justice 15 10
Security & peacebuilding 20 15 been in keeping with the requirements o f
6 3 Timor-Leste. Another is in police services
where the absence o f a set o f standardized
8 operating procedures for Timor-Leste as a
whole has led to a proliferation of approaches
to police procedures, the rectification o f which will take time and effort. With the advent o f SIPs
it should now be possible to ensure that there are common approaches adopted by all partners and
that there i s uniform and coordinated support for the policies and procedures to be followed in
each sector. That said, the Government will, as always, welcome the input o f Development
Partners inthe periodic review o f these sectoral policies and programs.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 22
Table 15 provides
information on the
number o f partners
that have been active
in each over the past
two years. It also lists
the sectoral
distribution of the
proposed new
activities that have
been identified in the
SIP exercise. A
number of points emerge. First, there are several five sectors inwhich there are a small number o f
proposed new starts and a small number o f active donors (Table 16): Power Communications,
Housing and other, External Relations, and Water Supply and Sanitation. Presumably it should
not be too difficult to reach agreement on appropriate arrangements for funding and improved
coordination in these sectors. Second, there are four sectors in which there are a small number o f
active donors and a large number o f new proposals: Education and Training, Natural Resources
and Environment, Private Sector Development and Transport. In these cases, there may need to
be close attention to packaging programs in ways that will facilitate effective implementation
without excessive numbers o f small activities with each donor. Third, there are four sectors with a
large number o f active donors and a large number o f proposed new activities: Agriculture,
Forestry and Fisheries; Rights, Equality and Justice; Health Care; and Public Sector Management.
Again, there will be a need for close attention to the overall approach in these sectors. There
would be little merit in having a large number o f active donors involved in many separate
activities. This is likely to put unnecessary burdens on the relevant ministries with respect to
coordination. The Local Government and Community Development Sector i s characterized by a
large number o f development partners and a very small number o f new activities. In this case, a
few partners may take the lead inthe program, or alternately several partners o f Timor-Leste may
enter into cofinancing arrangements with other donors who would like to be associated with the
program. The latter may be especially appropriate for the proposed new Community
Development Fund for local government. In the case o f the Security and Peacebuilding Sector,
there are a small number o f programs proposed, but there are a large number o f development
partners who are active in the sector. This will require close attention to coordination
mechanisms.
The challenge now i s to ensure that coordination mechanisms between the Government and the
donor community are strengthened. This must be done in ways that promote continuing
Government interaction with Development Partners o n the evolving policy, program and funding
issues in each sector. Work programs will evolve and new policy and capacity building
challenges will emerge. The policy and program elements o f each SIP will therefore need to be
updated. That may require specialized technical support for the Government agency that has the
lead responsibility for the SIP. This support will be needed during the periodic updates o f the SIP
report.
NEXT STEPS IN DIALOGUEWITH DEVELOPMENT PARTNERS
As noted above, the SIP process has identified more than 200 new activities and programs across
the 15 sectors that are proposed for approval and start up o f implementation during the next five
years. These programs have been prioritized within sectors by indicating the fiscal year in which
they would start implementation. A Project Information Summary has been prepared for each
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 23
activity and program. These summaries give details about the activity, including for example,
objectives for the program, the Government agency responsible for the program, start-up dates,
and disbursement activities. The total amount o f the proposed new approvals adds to about $550
million. The Government would give priority to early agreement with donors on the approximate
$130 million o f new approvals proposed for the year ahead. A process o f consultation has already
been launched to achieve this objective.
Not all o f these proposals would necessarily be implemented as separate projects and programs.
The expectation is that a number o f the smaller activities would be packaged into larger programs
and projects within each sector. A simple example: there are several separate activities listed for
the Prisons program. The Government would like to agree with a donor on a single Prisons
Project that includes all components. In some cases, there may be a need to package programs
across sectors to ensure appropriate coordination o f activities among sectors. An example may be
some o f the watershed protection activities that involve a number o f different agencies. In the
event that some o f the high priority programs are not funded by our partners in FY2004105,
various adjustments may be required in the program or alternate arrangements made for their
funding.
Moreover, there are many important cross-sectoral linkages among these programs. Steps are
being taken as part o f the SIP program to strengthen inter-agency coordination in the design and
implementation o f programs among sectors. Examples include timely support from the Water and
Sanitation Sector for new school construction programs, close collaboration between the
programs that expand access to safe water and the HealthMinistry.
NEXT STEPS INTHE SIP PROCESS
The Government has benefited from the preparation o f these SIPs ina variety o f ways and intends
to strengthen and broaden the process. The SIP process will be continued. It will be used to guide
decisions o n resource allocations for the medium term by building the results o f the work into the
budget and other planning activities o f the Government. A number o f initiatives are already
underway or are being planned:
Under TSP I11 the Government has committed itself to the development o f a
combined resources budget for FY2005106. The integration o f the SIPs with the
combined resources budget i s central to the Government's efforts to have at its
disposal an integrated framework that will allow informed decision making on the
deployment o f both CFET and donor resources in pursuit o f agreed development
objectives.
Additional work i s needed to review and refine a number o f the proposed
development benchmarks for the medium-term that have been built into the draft
SIPs. Such reviews will focus on development o f institutional and financial capacities
to achieve these targets, and in some cases whether there i s a need for more
aggressive progress towards key objectives identified inthe SIPs.
Closely related to ongoing assessments o f the financial costs o f various programs, is
the need to improve the reliability o f information on the unit costs for delivery o f
various government services. Many o f the historical data currently available are
heavily influenced by the inclusion o f expensive expatriate labor services in the cost
estimates. More work i s needed to improve the reliability o f these cost estimates.
The SIP exercise has also been hampered by incomplete information about the assets
o f the country the upkeep and management o f which i s the responsibility o f the
Government. These include various types o f equipment, facilities such as schools and
hospitals, and infrastructure such as roads and ports. Incomplete information has
Timor-Leste: Overview of Sector Investment Programs - Volume 1 24
hampered efforts to determine appropriate allowance for maintenance and capital
replacement expenditures. Steps are to be taken to address this problem.
Formation of sector working groups. The SIP process has highlighted the need to strengthen
capacities within the Government for longer term strategic planning across various sectors that
integrates concerns about the growth and movement o f the population, with the provision o f
economic opportunities, basic services and national security. The Government intends to take
steps to strengthen these capacities. As a first step, the Government has begun the formation o f
Sector working Groups (SWGs) for some or all sectors. These working groups to be chaired by a
senior Government official and are open to any donor who has an interest inthe particular sector.
Sector Working Groups for the Health Care, Agriculture and Basic Infrastructure have already
been formally established. The Government expects the formal establishment o f the SWG for
Education and Training by M a y 2005, followed by the gradual establishment o f the remaining
groups within this calendar year.
The responsibilities o f the groups will evolve inthe light o f experience, but are expected to range
from informal advice to the agencies o f Government that are responsible for the sector in question
to a more wide-ranging role. The groups will have the onerous task o f mobilizing the necessary
resources to carry out the proposed SIP program, and at the same time ensure coordination o f
activities within the sector. The role o f the group might be further enhanced by asking donors
with ongoing programs inthe sector to share lessons learned from their programs that can inturn
be used to improve the design and execution o f proposed new programs and projects. Each
working group would also assist in various ways with the periodic updating o f the SIP for their
sector.
Given their critical role in driving the SIP process, extensive support will be needed from the
donor community to ensure the success o f these groups. One o f the biggest challenges for the
Government i s strengthening the role and function o f the secretariat within each SWG. Some
SWGs will require technical support in the initial establishment phase o f the secretariat, as well
additional equipment and materials to assist the work o f the SWG. The Government foresees that
some sectors will also require the services o f short-term technical consultants o n annual basis to
update the existing SIP reports; however technical support may also be needed during the course
o f the year for other important activities discussed within the SWG. Within the next few months
the SWGs, with the assistance o f the Ministry o f Planning and Finance, will actively seek funding
support from the development partner community to strengthen the role and function o f the
SWGs.
Increased attention to monitoring and evaluation in each sector. In reviewing various drafts o f
the SIPs, a number o f donors have made the point that there was discussion o f the arrangements
needed within each sector for monitoring and evaluation (M&E) o f progress towards goals and
objectives. This was not an oversight o n the part o f the Government, but stemmed from a decision
early inthe SIP process to defer serious M&E work for each sector untilthe goals, objectives and
programs were clearly established and agreed upon within government. With the release o f the
final versions o f the SIPs, the Government believes that the basis now exists for serious work on
the detailed definition o f an M&E framework for each sector. The issue o f monitoring and
evaluation o f sector objectives should be discussed within the respective SWGs. T o ensure a
fully effective system o f M&E, the government is o f the opinion that thorough discussions must
be conducted before actual implementation o f an M&E system for each sector. Such discussions
will need to provide a consensus on what indicators are to be used, how information for each
indicator will be collected (from surveys, or from periodic reporting by civil servants, for
example), the frequency with which data will be collected, the assignment among government
Timor-Leste: Overview of Sector Investment Programs - Volume 1 25
agencies for the collection, storage and analysis o f these data, related training programs and the
costs o f such M&E programs. The development partners involved in these sectors will be
expected to guide the SWG in this issue and provide the necessary institutional support to ensure
its effectiveness. It is proposed that a pilot initiative for the design and implementation o f an
M&E system be developed within one SWG as soon as possible. Experience with the
development o f this pilot can then be transferred to other sectors. The Government would
welcome the support o f one or more partners for this pilot initiative.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 26
PART C: ANNEXES
ANNEX I. AN INTRODUCTION TO THE SIP PROCESS
THE ANALYTICAL FRAMEWORK
The framework developed for the SIP process has three components: (i) strategic analytical
a
model with projections to 2015; (ii)SIPs for each o f 15 sectors o f the economy that, taken
together, cover the activities o f the Executive Branch o f Government and the Judiciary.; and (iii)
brief summaries for each o f the proposed new programs and activities identified in the SIPs. In
addition, two other SIPs are currently being prepared. The SIP for Pillars o f the State will deal
with other key institutions o f the country, including the Office o f the President, the National
Parliament, the Office o f the Prime Minister, the Council o f Ministers, and the Bank Payments
Authority. The focus o f the other SIP, which i s titled Social, Civil and Heritage Protection, is on
providing support to those sections o f the population identified as most in need o f special
assistance or social protection. It also includes the need for civil protection in the event of small-
scale periodic or seasonal adverse events, or large-scale unpredictable adverse events. These two
SIPs will be completed within the next few months;after which the results will be incorporated
into the overall SIP framework.
An integrated strategic framework has been developed to anchor the entire SIP exercise to key
parameters such as population, GDP, labor force, and likely aggregate levels o f CFET and
development partner spending. The SIP strategic framework includes projections to 2015 for
GDP by sector, population, including the numbers o f people by age group and by sex category,
urban and rural population, farm and non-farm labor force, and likely aggregate CFET and the
resource availabilities o f our partners. The demographic components o f the model are all linked
thereby ensuring a consistent set o f projections for population, labor force and rural-urban
migration.
The fifteen sectors for which SIPs have already been prepared are grouped around four main
themes
A. Provision o fbasic services 1. Education and training
2. Health care
B. Support for the production sectors 3. Agriculture, forestry & fisheries
4. Natural resources & environment
5. Private sector development
C.Development o f infrastructure services 6. Communications
and housing 7. Housing and UrbanDevelopment
8. Power
9. Transport
10. Water supply and sanitation
D. Strengthening govemance 11. Public sector management
12. Local govemment & civil society
13. Rights, equality andjustice
14. Security, peacebuilding & reconciliation
15. External relations and cooperation
Timor-Leste: Overview of Sector Investment Programs - Volume I 27
Preparation o f the individual SIPs was done in a progressive fashion, with experience from the
initial phases o f the work being used to strengthen subsequent analysis and support inter-agency
discussions o n sectoral priorities and linkages. Key points about the process used to prepare the
individual SIPs are as follows:
Each SIP includes a statement o f goals and objectives for the sector as set forth in the
Constitution, the NDP or the MDG framework. Where practical, these have been
translated into specific performance benchmarks. For example, all the MDG targets
for 2015 are included inthe framework, along with targets for 2007 and 2010.
Each SIP includes the existing or proposed policy framework for the sector, and a
review o f the major challenges facing the sector.
A proposed sector work program for the medium-term is outlined ineach SIP, along
with ongoing and proposed new expenditures required to implement the work
program. Where possible, estimates o f expenditures are based on information about
the unit costs o f service delivery, capital replacement and maintenance costs o f public
infrastructure and other assets. These provided a basis for estimating the expenditures
needed to meet specific targets for 2007 for such things as school enrolments,
connections to safe water, and other indicators.
Ongoing and proposed new expenditures o f donors and CFET are included in the
analysis, thereby ensuring that the expenditure framework is presented on a
combined resources basis.
The SIP exercise has identified more than 200 highpriority program and project activities that are
proposed for funding and implementation over the next three years. The estimated cost o f each
activity is included in the sectoral expenditure framework, along with information for all ongoing
activities. Within each sector, these proposed new activities have been prioritized by designating
the year in which implementation would begin. Brief descriptions have been prepared for each
activity. These individual activities can be readily fed into ongoing mechanisms that focus on
likely donor and CFET funding.
COVERAGE AND SOURCES FOR INFORMATION
The SIPs include a large number o f development and performance indicators and estimates o f
unit costs for delivery o f various services. These data have been drawn from a variety o f sources
including the provision results o f the 2004 census, and various surveys undertaken in 2001, 2002
and 2003 with the help o f development partners. Where required information was not available,
estimates have been made.
The SIPs have also drawn heavily on the vision o f the NDP and the recently published report on
MDG targets for Timor-Leste." However, in almost all sectors, the ministries and agencies
concerned have been constrained by the absence o f agreed performance and service delivery
targets for the medium-term. Individual agencies have begun to address the problem in the SIP
exercise by formulating benchmarks and targets for 2007 and 2010 wherever practical. While the
SIP exercise has helped address this gap in the planning framework, more work remains to be
done inthis regard.
These fifteen sectors account for the entire CFET budget, except for allocations to the Office o f
the President and the National Parliament. Similarly, they account for the majority o f the
development and technical assistance, as well as budget support, provided by Development
Partners. Not included in the expenditure analysis, unless otherwise indicated, is humanitarian
I'Government of Timor-Leste andUnitedNations, Timor-Leste: Millennium Development GoalsReport,
February2004.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 28
and emergence assistance and the bilateral programs o f military assistance that are provided by
several donors. Complete information i s not currently available for the bilateral military
assistance programs.
Expenditure data have been provided by the Ministry o f Planning and Finance. Unless otherwise
specified, these data are drawn from two sources. CFET budget appropriations data have been
provided by the Budget Office for FY2001102 onwards. CFET data for FY1999100 and
FY2000101 are rough estimates based on aggregate data for CFET expenditures included in the
National Development Plan. Information about extemal assistance to Timor-Leste that i s included
in the reports is obtained from the Registry o f External Assistance (REA) database o f the
Ministry o f Planning and Finance. Data for extemal assistance are as o f December 31, 2004.
These data have been made available through the generous cooperation o f Timor-Leste's
Development Partners. Development partner data has been supplemented with information
provided by individual government agencies that have responsibilities for particular partner-
funded projects and programs. The information about these programs includes assistance
channeled by donors through international and local NGOs, as well as programs implemented
directly by individual donors. Some data provided by donors i s provisional and subject to change
as work on individual projects and programs progresses.
The data presented in these reports covers capital and recurrent expenditures and therefore aims
to present a total picture o f development spending in Timor-Leste. However, as the report
indicates, information o n these two categories i s incomplete in a number o f areas. Estimates are
based o n the limited information that was available for individual activities and programs.
Timor-Leste: Overview of Sector Investment Programs - Volume 1 29
ANNEX 11: POPULATION CHARACTERISTICS AND PROJECTIONS
A guiding principle for the Sector Investment Program (SIP) exercise was the use o f a common
set o f demographic data across all sectors to ensure comparability and consistency on all matters
related to the population o f Timor-Leste. The purpose o f this Annex is to describe briefly the
basis for the population projections used in the SIP exercise. The preliminary population
projections were preparedby the Direcqgo Nacional de Estatistica.
The SIP exercise requiredsix broad sets o f informationabout the population of the country:
Total population, with projections to 2015
Current and projected age structure o f the population
Male and female composition o f the population
Current and projectedurban and rural population
Current and projected number o furban and rural households.
Current and projected labor force.
The "Preliminary" status o f these projections must be emphasized. These are a first set o f
projections, based on the information available inJanuary 2005; the projections will be revisedat
a later time. The most important constraint i s the currently available data. Provisional results from
the 2004 Population and Housing Census were used as the starting point, but these will be
replaced by the final Census results. Additionally, for the three key demographic variables;
fertility (births), mortality (deaths) and migration, the data available for Timor-Leste are still
limitedand uncertain.
It is important that users understand that these populationprojections are neither predictions nor
forecasts. They present the statistical outcomes o f the selected assumptions about demographic
factors that underlie population change. Many non-demographic factors are excluded from the
projection assumptions, including the possibility o f future catastrophic events such as epidemics,
natural disasters and conflict. Nonetheless, these preliminary projections do provide a useful
indication o f the possible population for Timor-Leste up until2015. This i s particularly the case
for the age groups above 11 years, because the people who will be in these ages in 2015 were
born before the 2004 Census, and the majority will remain at younger ages where few deaths
occur. The projections for ages 11 and under are less reliable, because these depend on
assumptions about future fertility, and to a lesser extent infant and child mortality.
Methodology for the projections
The base population was taken from provisional data from the 2004 Census o f Population and
Housing, including population by single year o f age and sex, urban and rural population, and
male/female labour force participation and fadnon-farm occupations. The projections used a
cohort component methodology, by single year o f age, so that the impact o f the current age
structure i s fully taken into account., Age-specific fertility and mortality rates for Timor-Leste
were derived by applying international model fertility pattems and life tables to the assumed total
fertility rate (TFR) and crude death rate (CDR). The projection for each year was derived by
ageing the years population forward by one year with births estimated by applying age-specific
fertility rates to the female population in the childbearing ages (15-49), and deaths estimated by
applying male and female age-specific death rates to the entire population.
In addition to the main population projection, preliminary projections were also made for sub-
populations o f importance, including the urbadrural population, the labour force, and f a d n o n
Timor-Leste: Overview of Sector Investment Programs - Volume 1 30
farm occupations. These sub-projections are simple extrapolations based on assumptions about
total rates that have been applied to the total population. There has been no allowance for age
patterns that would apply to migration, labour force participation, and f a d n o n farm occupations.
Assumptions usedin projections
Fertility and mortality. Recent estimates for both fertility and mortality in Timor-Leste have
shown a wide range, leaving uncertainty about the current level and even the future direction for
these key demographic factors. For the projection o f population, a TFR o f 6.3 and CDR o f 15 per
thousand were assumed, levels that are near the middle range o f the recent estimates, and
plausible given the rates from other low income countries in recent years. To illustrate the
outcome o f maintaining high fertility and mortality levels, no change was assumed for both
fertility and mortality through to 2015, although small shifts in the TFR and the crude rates occur
from applying constant age specific rates to a changing age structure.
Migration, Zero external migration was assumedthroughout.
Urban and ruralpopulation growth. The urban population was projected by assuming an urban
population annual growth rate 2.2 percent higher than the projected annual national population
growth rate. The assumption implies steady rural to urban migration, in line with the experience
o f most developing countries. The rural population was derived by subtracting the urban
projection from the total.
Household size. Urban and rural household numbers were projected using the projected
populations and assuming average household sizes o f 5.5 persons for urban and 4.6 persons for
rural households.
Labour force participation. The future growth o f the labour force projection was based upon the
projected populations in the working ages (15-64 years) and labour force participation rates o f
48.1 percent for females and 69.3 percent for males, as indicated by provisional census data.
These participation rates were assumed for the entire 2004-2015 projection period.12 The number
o f farm and non-farm workers i s assumed to grow in line with the rural and urban population
growth rates.
I' There is some basis for thinking that these participation rates may be too low, or may rise in the future.
The assumed levels are substantially lower than those for comparable developing countries. The World
DevelopmentIndicators 2002 reports the average participation rate in low income developing countries in
2000 was 95 percent for males and 59 percent for females, with an overall average participation rate of 80
percent for all low income countries.
ANNEX 111: PROSPECTS FOR PRIVATE SECTOR DEVELOPMENT
WHAT ARE THE PROSPECTS FOR PRIVATE SECTOR GROWTH?
The private sector currently accounts for about $220 million, or about two-thirds o f GDP. The
agricultural sector accounts for almost half o f the private output in the economy. The extent to
which private investment can be increased over the next five years depends on business
opportunities and the enabling environment for investment. The make-up o f the non-agricultural
private sector i s changing rapidly now as investors who focused on donor-funded reconstruction
businessare winding down, or changing the focus of their activities.
The Government believes that there are significant opportunities in a number o f areas. Vigorous
investment promotion could lead to increased domestic and international investment in tourism,
commercial development o f natural resources and increased agricultural surpluses for domestic
and export markets. A carehlly targeted and aggressive promotional program could lift the level
o f private investment to about 8% o f GDP by 2008, with aggregate investment in the range o f
28% o f GDP. In combination with close attention to policies and measures that supported the
domestic Construction industry and increased local procurement on government account, the
outlook for growth in the non-farm production, incomes and farm employment would be
considerably enhanced. Nonetheless, creating enough employment in the non-farm private sector
to absorb the large number o f new entrants each year will be a major challenge.
With appropriate supporting policies, private sector growth could make a significant contribution
to employment creation. As the foregoing discussion highlights, the construction sector can make
an important contribution to employment creation, as can sub-contracting arrangements related to
Government procurement. There are attractive possibilities for employment creation in the
construction sector, and the financial sector as service coverage expands and in the tourism
sector. Increased emphasis on outsourcing government procurement to local suppliers can also
contribute to employment growth. These domestic programs are likely to be supplemented with
an overseas workers program. In the year ahead the Government plans to start an overseas
workers program. While no final agreements have been reached, a program that sends 1,000
laborers a year would take some pressures from the domestic market and would likely result inan
important inflow o f remittances from abroad, thereby boosting domestic demand.
POTENTIAL FOR COMMERCIAL AGRICULTURE
Timor-Leste i s a predominantly rural economy with a majority o f the population dependent on
agriculture for their livelihood. Agriculture, forestry and fisheries currently accounts for about 30
percent o f GDP and provides a livelihood for about 720,000 people or about 77 percent o f the
population. Although agriculture i s the main employer and contributor for private sector non-oil
GDP it i s characterized by a system o f subsistence production. There are approximately 160,000
rural households, at least 70,000 o f which are engaged in subsistence farming, producing no
saleable surplus, and generating no non-farm income. Approximately 70,000 rural households
produced saleable surplus - mainly rice and coffee. Coffee i s the main commercial industry
within the sector, accounting for $7 million o f the $8 million o f exports in2004. The main market
player i s "Cooperative Cafk Timor (CCT)" which is organized under a cooperative system o f
production "Cooperatives o f Organic Coffee". Timorese organic coffee has reached an important
position inworld organic coffee market.
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Timor-Leste has approximately 600,000 hectares o f land suitable for crop and livestock
production, with 67,000 hectares said to be suitable for wetland rice and 160,000 hectares suitable
for other field crops. The remainder is suitable for grazing cattle and goats.
Emphasis to date has been on the rehabilitation o f irrigation schemes as the primary means o f
realizing agricultural production gains. Irrigation schemes in Timor-Leste are essentially small
"run-of -the -river" schemes. Because o f the nature o f the terrain and the rainfall pattem the
numerous rivers are basically large storm water drains. It is essential to carry out feasibility
studies to determine the possibilities regarding the construction o f reservoirs for storing
substantial amounts o f water for irrigation during the dry season. Most community level irrigation
systems are small, frequently covering an irrigable area o f around 100 hectares. Maintenance is a
chronic problem with river-in-flood damage and siltation the main reasons for damage.
Historically, farmers in Timor-Leste have been unable or unwilling to maintain these schemes,
relying on government and donors for maintenance and, eventually, rehabilitation. There are
some 420 schemes in total, o f which only about 10 have modest water storage and thus the
potential to produce two crops a year. There i s agronomic potential to increase rice production
and to introduce other high value crops in rehabilitated irrigation schemes. Intensification o f
production, resulting from improved water use efficiency will be dependent o n effective
extension programs, access to credit and improved technology and will include moves towards
farm mechanization. Further exploitation o f this potential is hampered by lack o f reliable access
to markets for surpluses, which need to be competitive in price and quality with imports.
Significant post-harvest losses, sometimes as high as 40 percent, are common for rice (and other
crops such as maize). Poor processing o f rice, mainly because o f poorly maintained and
outmoded machines, often results in poorer prices because o f high levels o f cracked and broken
grain. Improved milling efficiency and reduced post-harvest losses have the potential to make a
rapid impact on rice availability and some impact on prices. Similarly reduced post-harvest losses
inrice and maize through improved storage can improve food supplies by up to 30%. Reducing
post harvest losses o f food crops through proven and simple technology offers one o f the fastest
ways o f improving food security and self reliance.
The total area cultivated for crops falls well short o f the potential and may only be some 80
percent o f the areajudged to be suitable for cropping, either alone or in association with livestock
farming. It is generally agreed that the potential exists to increase crop, pasture and livestock
production in three ways: (i)expansion in the area cultivated; (ii) more intensive use o f land; and
(iii)increasedproductivity inproductionsystems. However, the exploitation of this potential
must take account o f uncertainties stemming from uneven rainfall and droughts. The mountainous
topography results ina diversity o f microclimates that affects production levels and types o f crops
grown. This diversity adds complexity to the design o f programs and information services aimed
at boosting farm productivity.
However, the dominant influence o n the slow rate o f actual productivity growth has been lack o f
access to functioning markets, which were severely disrupted during 1999. Restricted market
access translates into weak incentives for farmers to adopt improved practices or to increase
output above subsistence levels. Anecdotal evidence from several projects suggests that many
farmers are willing and able to increase production but can see little incentive to do so because o f
low prices, high input costs and market-related uncertainties. Unrealistic expectations about
prices for rice, resulting from long experience o f government purchases at fixed prices, are also
reported to be a problem as farmers adjust slowly to the new competitive marketing environment.
It seems that livestock numbers generally have returned to pre-independence levels with the
exception o f goats. Goats currently number about 85,000 compared with quoted figures o f well
Timor-Leste: Overview of Sector Investment Programs - Volume I 33
over 200,000 in 1997-1998 and in 1972. Timor Leste is considered to have the potential to
support over 400,000 ruminants (cattle, buffalo, goats and sheep), compared with about 350,000.
There is potential for increasing the livestock production, with possible development for
exportation of live cattle. It is expected that the increase in numbers will be accompanied by an
equivalent improvement in the grazing fields, so as to ensure sustainability. This is not a new
practice as the occurrence o f roadside and living fences (Leucaena in particular) is common.
There is potential for additional development and integration o f forager leguminous plants within
the production systems. Given the importance o f dry-season paddy land to livestock production,
there may be scope to consider irrigated pasture in some areas in the future. This might be
incorporated into work on existing farming systems or as a component in forestry programs. If
there is not a parallel development o f cut and carry forages, an animal population o f more than
400,000 ruminants, 400,000 pigs (and horses) and over 600,000 chickens and ducks, may be
unsustainable. There is ample evidence in other areas in the region to show that improved fodder
can improve animal growth rates by at least 50 percent and may have at least as significant an
impact on productivity as vaccination programs. However, it i s recognized that efforts to
introduce forage improvements will be limited by the degree to which farmers are constrained by
the security o f land tenure.
The programs for development o f commercial agriculture are outlined in Chapter Io f Volume I1
and therefore will not be included here. Suffice to say that the primary investment opportunities
in areas related to agriculture include commercial crops to meet domestic demand and in some
cases, replace imports, post harvesting processing, storage and marketing, agricultural exports,
and food processing. The SIP for Agriculture, Forestry and Fisheries identifies a number o f
specific opportunities, including expansion o f the coconut oil industry to replace imported
vegetable, increased production under irrigation, honey production for domestic and export
markets, edible bamboos shoots that might be the basis for a canning industry aimed at export
markets, and specialty export crops such as vanilla. There may also be prospects for meat and
poultry production. There are also prospects for development o f forest products industries that
center on revival o f the sandalwood industry and on specialty products such as rattan for furniture
making. The greatest challenge inthe fisheries sector is the need to develop a legal framework for
the sustainable management o f the resources and to develop an effective monitoring, control and
management o f the surveillance systems to encourage domestic and external investment so as to
obtain substantial benefits for the country. There has also been some interest shown in the
investment on fishery operations, and the Ministry will begin to issue fishery licences within a
very limited scale, for the seas o f Timor, implementing at the same time the monitoring o f catches
and a surveillance system, so as to start the collection o f data on the state o f resources, as well as
fishery activities.
CONSTRUCTIONACTIVITIES AS A SOURCE OF EMPLOYMENT
Policies and programs for the construction industry are o f particular interest at this time because
o f their potential for job creation. Construction activities grew rapidly during the 1999-2002
period, but with investment expenditures are declining in Timor-Leste from the extraordinary
levels that prevailed during 2000-2002 there was some slowdown in construction during 2003.
There are no precise estimates at this stage for the civil works component o f planned capital
spending for the next four years. However, the SIP for Private Sector Development includes a
rough estimate o f the total value o f construction work that may be undertaken during the next five
years under the assumption that the proposed expenditure programs in the various SIPS could be
funded and implemented. The estimate includes new construction as well as maintenance
expenditures on roads and public buildings, including education and health care facilities and
makes a small allowance for other public and private construction activities (for example,
housing and so on). This is a significant market that provides an important opportunity for
Timor-Leste: Overview of Sector Investment Programs - Volume 1 34
business development and job creation, especially with labour intensive methods o f construction,
repair and maintenance.
The challenge will be to ensure that the majority o f this work goes to local contractors and, where
appropriate, uses labour intensive methods o f construction. As noted earlier, there has been
progress over the past four years in developing a domestic construction industry, but realizing this
employment potential will require further concerted action. These include policies that encourage
development partners to subcontract to the maximum extent feasible the civil works components
o f their aid programs to local contractorshusinesses. Another option is to adopt a set o f
procurement rules that give generous preferences to local contractors and foreign contractors bid
o n Government tenders and that have partnerships with local contractors. Besides vocational and
technical training in order to increase productivity o f the work force, one o f the constraints for
local business i s access to machinery and equipment. The development o f a leasing industry that
provides access to construction equipment at reasonable cost would strengthen the capacity o f
small firms to compete more effectively.
MANUFACTURES AND SERVICES
Investment in production o f manufactures has, to date, been very limited. Most domestic needs
are met from imports. There has been a reasonable level o f investment intrading businesses, both
formal trading houses in Dili as well as sizable, but less formal trading businesses along the
border with West Timor. There has been disinvestment in restaurants targeting internationals,
and investment in hotels and guesthouses has leveled off. There are growing indications o f
increased private sector capacities in a number o f areas o f manufacturing, including as furniture,
tais weaving, tailoring or bakeries as well as in services like business services and consulting,
information technology and vehicle and electrical repair.
One potential avenue for further development o f domestic business relates to Government
spending on goods and services. Currently planned CFET appropriations suggest that the
Government will spend a total o f $125 million on various services and $70 million on supplies
and equipment over the next four years, or about $50 million a year. (These estimates exclude
fuel imports, construction and building maintenance.) At the time that the SIPS were prepared
information was not available on the extent to which these goods and services are tendered to the
private sector and the extent to which domestic business i s successful in winning tenders. A high
proportion o f the services required can be provided locally (maintenance o f equipment and
vehicles, for example), and perhaps some o f the supplies can also be sourced locally, with modest
amounts o f value added as a result o f local processing or preparation. The growth in spending o n
these items i s projected in the budget at about six percent a year, or about $2-3 million a year.
The issue is the extent to which a growing share o f these expenditures can be channeled to the
local market. Even if the import content o f some o f the required goods and services i s high, there
may still be scope for using Government procurement to foster domestic business activities in
ways that adds some value and thereby create employment. One example i s the development o f a
domestic furniture industry using local materials that can meet the needs o f the school system, as
well as private demand. A number o f other governments have used "domestic content" rules in
the public procurement o f goods and services. The purpose is to require the successful bidders to
add value domestically through training and employment o f staff/labour and use o f some locally
made products, where suitable supplies are available
PETROLEUM AND MINING
The potential o f the Timor Sea Project is well known and need not be recounted here. The Project
i s expected to generate substantial revenues from royalties and corporate taxes for an extended
period. There has also been a long history o f onshore petroleum exploration in Timor-Leste, with
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 35
the first series of wells being drilled during 1900-1914. Despite the long history of exploration,
not much is known about the onshore and near-shore potential, in part because the Government
does not have access to records from the exploratory drilling. Non-commercial quantities o f oil
and gas were recovered from a number o f wells drilled, with more than 20 wells having been
capped. In addition, over 30 oil or gas seepages have been documented along the southern coast,
suggesting further reserves in the area. In 2001 the Timor Oil Company which had carried out
much o f the exploration during 1910-1975 submitted a proposal for some $67 million o f onshore
and near-shore exploration and development work. An unsolicited proposal related to the gas
seeps was also received from the Independent Oil and Gas Joint Venture. The willingness o f these
investors to make additional sizable investments in exploration suggests that the country may
have important onshore and near shore reserves suitable for commercial development. The
Government has commissioned additional survey work to obtain up-to-date and reliable
assessments o f these resources before entering into discussions with potential investors who may
wish to undertake exploration programs. Commercial development o f onshore resources would
offer significant opportunities for the further development o f a range o f domestic businesses.
FINANCIAL SECTOR DEVELOPMENT
Although a better understanding o f the overall national demand for banking and financial services
is needed, it is already clear that further development o f the financial sector will be essential for
sustained growth o f the private business sector. The reconstitution o f the financial sector i s still at
an early stage in Timor-Leste, having experienced a major contraction following the departure o f
Indonesia in 1999.13An important feature o f the period was that savings far exceeded lending.I4
There was a demand for safe institutional arrangements for savings. In the aftermath of the
referendum, Timor-Leste was left with four functional credit unions and no commercial banks.
Three commercial banks have begun operations, but the services are largely confined to major
urban centers, namely Dili. Outstanding credits totaled $43 million at end March 2004, and total
deposits o f private and non-financial public companies stood at $75 million. Several other foreign
banks have expressed interest in obtaining banking licenses. There has been no investment in
non-banking parts o f the financial sector, including leasing, insurance and other services. Work
on establishing these financial services needs to be expedited. It i s expected that the legislation in
the insurance and banking areas now undergoing consultation will foster development o f the non-
banking financial sector.
Banking services also needto be re-established inrural areas. The ADB (and other Development
Partners) have provided support for the development o f microfinance services organizations and
for the institutional development o f aspects o f the financial sector. Training o f lenders and
lending staff i s expected to help ensure that micro-enterprises and small businesses have
maximum ability to access formal credit. In the course o f preparing the master plan for
development o f postal services, proposals were developed to extend the range o f services to be
provided through postal outlets, including postal banking services that provide cash and demand
accounts, payments capabilities and certain approved lending.
l3 Prior to the referendum, Timor-Leste was served by 18 banking units, including five branches o f
Indonesian state banks, 10 regional development banks and 3 Indonesian private banks. Bank Rakyat
operated a number of village banks that provided general savings and loan services at the village level.
Moreover, some 27 credit unions were in operationat that time.
l4In early 1999, savings accounts totaled $68 million whereas loans outstanding amounted to only $18
million.
Timor-Leste: Overview of Sector Investment Proprams - Volume 1 36
PRIVATE PARTICIPATION IN INFRASTRUCTURE
With the major reconstruction phase over, the Government feels there is a need to consider
additional ways o f encouraging private participation in infrastructure. The 15-year BOT
franchise with Timor Telecom is operational and the EDTL management contract became
effective at the beginning o f 2004. Other possible involvement o f private investors in
infrastructure services might extend to ports as a way o f financing expansion and improvements
without drawing on the national budget. There is also opportunity for investment in private land
and property that may, in due course, be divested by Government, as well as in carbon reducing
investments in the energy sector through which the Government may derive income. Further
private participation in infrastructure to support foreign direct investment might also need to be
considered.
TOURISM DEVELOPMENT
The tourism sector in Timor-Leste has considerable potential with a large range o f high value
tourism products. Investment by private businesses will be the key driver o f growth in this sector.
Private investments in the tourism sector, especially by dive and tour operators and hotels, seem
to have grown inthe period since Independence, apparently often taking the form o f expansion o f
existing businesses. Further development o f the tourism sector, even o f modest proportions, has
the potential to deliver considerable national development benefits, particularly as a source o f
employment creation. The Government intends to take active role in promoting tourism and
assisting private sector operators to develop the potential o f this important economy. The
Government has already, under its own budget, reviewed the potential scope o f tourism inTimor-
Leste, engaged support from Portugal, Australia, Thailand, Macau (PR China) and worked with
the private sector to establish the Tourism Association o f Timor-Leste. Also the World Tourism
Organization is ready to develop a Project for "Sustainable Tourism Sector Development and
Institutional Strengthening" (National Tourism Development Plan) coming out with a short,
medium and long term policy for tourism (This project i s now being reviewed by the Office o f
the Prime Minister office and will be funded by WTO and UNDP.) The Government would like
to build on these efforts, with a focus on supporting infrastructure development, statistics, policy
and regulatory development, planning and zoning, and by underwriting national promotion efforts
in support o f private operators. The key objective is to build a tourism industry that generates
employment, i s sensitive to environmental concerns and maintains culture.
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